Starz Entertainment (NASDAQ:STRZ) executives said the company delivered a “strong quarter” to close fiscal 2025 and outlined a 2026 plan centered on OTT revenue growth, improved cash generation, and lower leverage, while also signaling a shift away from quarterly subscriber disclosures.
Fiscal 2025 results and operating highlights
President and CEO Jeffrey Hirsch said the company exceeded its financial guidance for 2025 amid broader industry pressures. He pointed to an “all-time high” of 12.7 million OTT subscribers, which he said grew 7.6% year-over-year. Hirsch added that Starz grew OTT subscribers in three of four quarters, including adding 370,000 in the fourth quarter, which contributed to 170,000 total subscriber growth in Q4 as linear declines partially offset OTT additions.
Management credited fourth-quarter subscriber gains to its programming slate. Hirsch said the company premiered a “highly anticipated” Spartacus revival and noted that Power Book IV: Force Season 3 posted 57% in-season viewership growth. He also said momentum continued into 2026, resulting in “a strong start to the year.”
Fourth-quarter financial details
CFO Scott Macdonald said fourth-quarter results reflected the transition of Canadian operations to a content licensing relationship, and he focused his subscriber comments on the U.S. business. He said total U.S. subscribers ended the quarter at 17.6 million, with OTT growth partly offset by linear subscriber declines.
Macdonald reported fourth-quarter revenue of $323 million, up 60 basis points sequentially. He attributed sequential revenue growth to higher distribution revenue, primarily from revenue recognized in connection with the Canadian transition, which he said was reflected in the “linear and other” revenue line. That increase was partially offset by declines in linear and OTT revenue driven by traditional linear erosion and “heavy holiday seasonal promotions,” including lower-churn multi-month plans.
Adjusted OIBDA was $56 million in the quarter, up more than 100% sequentially, which Macdonald said was due to lower programming amortization, lower advertising marketing, and higher revenue.
Balance sheet, leverage, and 2026 cash flow outlook
Macdonald said Starz ended the quarter with net debt of $589 million, roughly flat versus the third quarter. He reported gross debt of $625 million, including $325 million of 5.5% senior unsecured notes and $300 million of Term Loan A. Cash was $36 million, and the company’s $150 million revolver was undrawn.
Looking ahead, Hirsch and Macdonald characterized 2026 as an inflection year for free cash flow. Management said it expects:
- OTT revenue growth in 2026
- Low single-digit percentage adjusted OIBDA growth versus 2025
- $80 million to $120 million of positive unlevered free cash flow
- Positive equity free cash flow for the year
- Year-end leverage of approximately 2.7x, down from 2.9x
Macdonald said the expected year-over-year improvement in cash flow reflects lower cash content spend in 2026 versus 2025, bringing cash content payments closer to programming amortization on the income statement. He added that Starz has been aligning production spending and payment timing more closely with industry standards following its separation from a larger studio structure. He said content spend is expected to come in “under about $650 million” next year, with a less “choppy” P&L cadence and a stronger fourth quarter relative to the first three quarters.
Programming strategy, ownership, and international monetization
Hirsch reiterated Starz’s strategy of focusing on “edgy, premium content for women and underrepresented audiences,” and he outlined a 2026 original programming slate that includes the conclusion of Outlander and Power Book III: Raising Kanan, the premiere of Fightland, the return of Blood of My Blood, and the return of P-Valley.
Operationally, Hirsch said Starz restructured its Canadian business into a licensing revenue stream to prioritize the U.S. market. He also highlighted progress on content ownership, including the production of Fightland as its “first wholly owned series.” The company also announced that Sky will join as a co-commission partner for Fightland, which Hirsch said improves unit economics.
On the call, Hirsch said the company’s content strategy includes “de-aging” its slate while expanding key franchises. He cited the launch of the Outlander prequel Blood of My Blood and said a new Power universe series, Power: Origins, with an 18-episode order, is in production.
In Q&A, Hirsch said Starz has designed its slate with international revenue in mind and sees demand for its shows in major markets including the U.K., and “over time” in France. He said Lionsgate remains Starz’s international sales partner and will sell Fightland outside Sky markets. Macdonald also noted Starz had $41 million in production loans, which he said related to Fightland.
Disclosure change, bundling, and capital allocation
Hirsch said Starz will stop disclosing subscriber figures beginning with the March 2026 quarter, describing the move as part of a shift to prioritize OTT revenue growth, profitability, free cash flow conversion, and deleveraging rather than managing to quarterly subscriber levels.
Executives also discussed bundling and distribution partnerships. STARZ Networks President Alison Hoffman said the company is focused on being a complementary add-on partner to both broad-based and targeted streamers. She said Starz’s data indicates bundling is expanding total addressable market, driving net new additions, being revenue accretive, and improving retention.
On pricing, Hirsch said Starz has aimed to remain “underpriced” relative to broad-based streamers, and he suggested price increases by larger services have created room for Starz to consider its own pricing power, depending on timing and slate.
Regarding consolidation, Hirsch said Starz sees potential opportunities to scale, particularly involving linear networks with strong brands that lack digital tech capabilities. However, he emphasized a desire to operate around a 2.5x leverage level and said the company would be cautious about deals that would push leverage to materially higher levels. On capital allocation, management said improving cash flow could allow further investment and, over time, potentially shareholder returns.
Finally, Hirsch said Starz is using AI in several areas, including in production to reduce costs—citing its use in Spartacus for some large scenes—as well as internal training and analytics related to acquisition, retention, pricing, scheduling, and churn.
About Starz Entertainment (NASDAQ:STRZ)
Starz Entertainment (NASDAQ: STRZ) is a global media and entertainment company that operates premium subscription video services across linear television and digital streaming platforms. The company’s core offering includes the STARZ and STARZ ENCORE linear networks in the United States, alongside its STARZPLAY streaming service, which is available in North America, parts of Europe, Latin America and select Asian markets. Through its multi-platform distribution strategy, Starz delivers a combination of original programming, feature films and licensed series to a broad subscriber base.
At the heart of Starz Entertainment’s business is its investment in original content production.
