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STARZ ENTERTAINMENT CORP /CN/ (STRZ)·Q1 2026 Earnings Summary

Executive Summary

  • Q1 2026 headline metrics from S&P Global: Revenue $0.526B*, Diluted EPS -$0.32*, EBITDA $4.0M*; results missed consensus on revenue and EPS but beat EBITDA versus Street estimates*. Values retrieved from S&P Global.
  • Against recent quarters, STRZ showed sequential revenue improvement versus Q2–Q3 2025 press releases ($0.320B in Q3 2025, $0.320B in Q2 2025) while still operating at net loss in Q3 2025 due to linear pressure and higher marketing tied to tentpoles .
  • Management previously reaffirmed ~$200M Adjusted OIBDA for calendar 2025 and projected exit leverage ~3.1x; content cash spend guided to “just under $700M” in 2026, with a path to 20% margins by end-2028 .
  • Operational catalysts: strong app engagement (12‑month high) driven by Outlander: Blood of My Blood and Ballerina; ongoing slate in Q4 2025 and into 2026 (Force, Spartacus: House of Ashur, P‑Valley, Fightland) .

What Went Well and What Went Wrong

What Went Well

  • Engagement hit a 12‑month high, fueled by Outlander prequel and Ballerina; CEO: “we expect to continue our momentum to close out 2025” .
  • Sequential U.S. OTT subscriber growth returned (+110k in Q3 2025) and management reiterated 2025 outlook; CFO affirmed ~$200M Adjusted OIBDA for calendar 2025 .
  • Strategic shift in Canada from JV to content licensing improves stability and economics, with reinstatement of ~250k Canadian linear subs following carriage dispute resolution .

What Went Wrong

  • Linear declines continued, reducing total U.S. subscribers sequentially despite OTT growth; Q3 2025 total U.S. subs fell by 130k q/q on linear pressure .
  • Q3 2025 Adjusted OIBDA down sequentially to $21.8M due to higher marketing for key premieres; CFO highlighted expected cadence and cost timing .
  • Underperformance of BMF season 4 weighed on Q2 2025 OTT additions and revenue, creating sequential softness before Outlander’s rebound .

Financial Results

Core P&L vs prior periods and estimates

MetricQ2 2025 (Jun 30, 2025)Q3 2025 (Sep 30, 2025)Q4 2025 (Mar 31, 2025)Q1 2026
Revenue ($USD Billions)$0.320 $0.321 $0.331 $0.526*
Diluted EPS ($USD)$(2.54) $(3.15) N/A (EPS not reported) $(0.32)*
EBITDA ($USD Millions)N/AN/AAdjusted OIBDA: $93.3 $4.0*
EBIT Margin (%)———-0.08%*
Net Income Margin (%)———-20.7%*

Notes:

  • Q4 2025 EPS was not reported due to separation timing; EPS reporting began with the quarter ended June 30, 2025 .
  • Asterisk indicates values retrieved from S&P Global.

Segment Revenue Breakdown (reported)

SegmentQ2 2025Q3 2025
OTT Revenue ($USD Millions)$221.1 $222.8
Linear and Other Revenue ($USD Millions)$98.6 $98.1
Total Revenue ($USD Millions)$319.7 $320.9

KPIs (Subscribers)

KPI (Millions)6/30/20259/30/2025
U.S. OTT12.18 12.29
U.S. Linear5.41 5.17
Total U.S.17.59 17.46
Canada OTT0.68 0.68
Canada Linear0.81 1.06 (reinstated)
Total North America19.08 19.20

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Adjusted OIBDACY 2025“~$200M” reiterated in Q4/Q3 calls“~$200M” reaffirmedMaintained
Leverage (TTM)Exit CY 2025~3.1x expected~3.1x expectedMaintained
Content Cash SpendCY 2026Prior commentary: de-aging and ownership shift“Just under $700M” target; path to $600–650M over timeRaised specificity (range)
Canadian Business ModelStarting Dec quarterJV in Canada; subs reportedShift to licensing; Canadian subs to stop being reported; licensing within linear & other revenueStructural change
Margin TargetExit CY 202820% margin target20% margin target with self-help (owned IP, cost control)Maintained

Earnings Call Themes & Trends

TopicQ2 2025 (Prev Mentions)Q3 2025 (Prev Mentions)Q1 2026 (Current Period)Trend
Owned IP & cost per hour savingsPlan to own slate; ~$1–2M/hour savings; Fightland season-one cost ~30% below recent season-one averages Co-commission partner on Fightland; accretive to OIBDA/FCF; ownership to 50% of slate by 2027 No transcript available; strategy unchangedPositive execution momentum
Canada modelLegacy JV; carrier dispute impact Shift to licensing; subs stop reported; revenue shifts to linear & other Licensing revenue embedded from Dec quarter onward; more output deals globally targeted Stabilizing economics
Churn vs gross addsBMF softness hit gross adds 2/3 gross adds, 1/3 churn reduction; longer offers reduce churn to low single digits at months 7/13 No transcript availableImproving retention via pricing and slate cadence
Leverage/deleveragingTTM 3.2x; expect ~3.5x in Sep due to payment timing; exit ~3.1x TTM 3.4x; exit ~3.1x; Q4 OIBDA needed ~$52M No transcript availablePath to delever intact
Content cash spendTowards ~$700M in 2026, moving to $600–650M later “Just under $700M” reiterated; de-aging lowers per‑episode cost No transcript availableDownward trajectory over time

Management Commentary

  • CEO (Q3 2025): “We expect to continue our momentum to close out 2025… generating new revenue through content licensing and getting more ownership of series… at improved economics.”
  • CEO (Q3 2025): “We are moving from a joint venture model to a… content licensing agreement with our partner, Bell Canada… modestly accretive to adjusted OIBDA and free cash flow in calendar 2026.”
  • CFO (Q3 2025): “Adjusted OIBDA of $22M was… down $11M sequentially due to higher advertising and marketing costs… we continue to expect to exit the year with leverage at approximately 3.1x.”
  • CEO (Q2 2025): “Our Outlander prequel… generated the third highest number of subscriber additions for a series premiere in STARZ’s history… we remain confident in… sequential revenue growth and OTT subscriber growth.”

Q&A Highlights

  • Content ownership economics: management detailed de‑aging shows and owning IP to lower per‑hour costs and monetize internationally; target 50% owned slate by 2027 .
  • Canadian licensing model: expected to more than cover prior subscription revenue, provide stability, and become part of linear & other revenue .
  • Cash spend and margin trajectory: 2026 cash content spend “just under $700M,” decreasing towards $600–650M; margin goal 20% by end‑2028 via self‑help .
  • Churn management: longer offers and slate cadence reduce churn to low single digits at critical tenure points; bundles improve retention by >20% .

Estimates Context

  • Q1 2026 vs S&P Global consensus:
    • Revenue: $0.5647B est vs $0.5259B actual → bold miss*. Values retrieved from S&P Global.
    • EPS: -$0.19 est vs -$0.32 actual → bold miss*.
    • EBITDA: -$10.96M est vs $4.0M actual → bold beat*.
MetricConsensus (Q1 2026)Actual (Q1 2026)
Revenue ($USD Billions)$0.565*$0.526*
Primary EPS ($USD)$(0.19)*$(0.32)*
EBITDA ($USD Millions)$(11.0)*$4.0*

Asterisk indicates values retrieved from S&P Global.

Key Takeaways for Investors

  • Near-term setup: Q1 2026 appears to have missed Street on revenue and EPS but beat on EBITDA*, consistent with the transition year narrative and content timing cadence. Values retrieved from S&P Global.
  • Execution pillars intact: management reiterated ~$200M Adjusted OIBDA for CY2025 and exit leverage ~3.1x, with strong engagement trends and sequential OTT growth in Q3 2025 .
  • 2026–2028 margin path credible: de‑aging slate, owned IP (Fightland, others), and Canadian licensing should compress per‑episode costs and add stable licensing revenue, supporting margin expansion .
  • Content cash spend declines: target “just under $700M” in 2026, stepping down further, improving FCF conversion and deleveraging capacity .
  • Bundling and slate cadence reduce churn: data‑driven offers and back‑to‑back tentpoles lower churn and extend LTV; bundles show >20% retention uplift .
  • Monitor linear attrition vs OTT momentum: linear pressure persists; OTT engagement and tentpole performance (Force, Spartacus) are key swing factors for subscriber trajectory .
  • Watch international output deals: management intends to package owned originals for global licensing, adding incremental revenue without operating international services .

Additional notes:

  • Q1 2026 primary source documents (8‑K 2.02 and call transcript) were not available in the document catalog; trend and qualitative synthesis relies on Q2/Q3/Q4 2025 filings and earnings calls –.
  • All starred values were retrieved from S&P Global.