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STARZ ENTERTAINMENT CORP /CN/ (STRZ)·Q3 2025 Earnings Summary

Executive Summary

  • Revenue returned to sequential growth and U.S. OTT subscribers increased, supported by Outlander: Blood of My Blood and the earlier-than-planned pay-one premiere of Ballerina .
  • Adjusted OIBDA fell sequentially to $21.8M due to elevated advertising and marketing spend around tentpoles; management reaffirmed FY2025 Adjusted OIBDA guidance of approximately $200M and positive sequential revenue and U.S. OTT subscriber growth for Q4 .
  • Canadian operations were structurally simplified into a licensing arrangement with Bell; STARZ will stop reporting Canadian subscribers starting in Q4 and recognize licensing revenue within “linear and other” .
  • Leverage improved to 3.4x TTM; management targets ~3.1x by year-end and a path to 20% margins by exiting 2028 via IP ownership, slate “de‑aging,” and lower content cash spend in 2026 .
  • Near-term stock catalysts: delivering ~$52M Adjusted OIBDA in Q4 to hit the ~$200M FY target, continued OTT growth on Force and Spartacus premieres, and execution of the Canada licensing pivot .

What Went Well and What Went Wrong

What Went Well

  • OTT engagement reached a 12‑month high; U.S. OTT subscribers grew +110k sequentially to 12.3M, +670k YoY, with content momentum from Outlander: Blood of My Blood and Ballerina .
  • Management reiterated all 2025 outlook items and expects to finish FY2025 at approximately $200M Adjusted OIBDA; “we feel confident getting there… it is about $52 million that we need in Q4” .
  • Strategic shift in Canada to a licensing model with Bell improves stability and economics; “this approach is consistent with our strategy of owning our content and creating incremental licensing revenue” .

What Went Wrong

  • Net loss widened YoY; EPS was $(3.15) vs $(2.54) in Q2 and $(1.83) in Q3 2024, reflecting higher D&A and restructuring/other costs .
  • Adjusted OIBDA declined to $21.8M from $33.4M in Q2 due to higher advertising and marketing for new tentpoles and Ballerina’s earlier premiere .
  • Continued pressure on linear subscribers weighed on total U.S. subscribers, which fell sequentially to 17.5M despite OTT gains .

Financial Results

Headline Financials vs Prior Periods

MetricQ3 2024Q2 2025Q3 2025
Revenue ($USD Millions)$346.9 $319.7 $320.9
Operating Income (Loss) ($USD Millions)$(17.0) $(26.9) $(34.8)
Adjusted OIBDA ($USD Millions)$24.7 $33.4 $21.8
EPS – Continuing Ops ($USD)$(1.83) $(2.54) $(3.15)

Notes: Sequential revenue growth achieved; Adjusted OIBDA down on higher marketing tied to tentpoles .

Revenue Mix (OTT vs Linear & Other)

Revenue MixQ3 2024Q2 2025Q3 2025
OTT Revenue ($USD Millions)$232.2 $221.1 $222.8
Linear & Other Revenue ($USD Millions)$114.7 $98.6 $98.1
Total Revenue ($USD Millions)$346.9 $319.7 $320.9

KPIs (Subscribers and Engagement)

KPIQ3 2024 (9/30/2024)Q2 2025 (6/30/2025)Q3 2025 (9/30/2025)
U.S. OTT Subscribers (Millions)11.62 12.18 12.29
Total U.S. Subscribers (Millions)17.83 17.59 17.46
Starz Networks Total Subscribers (U.S.+Canada, Millions)20.15 19.08 19.20
OTT Engagement (Monthly Active Viewers vs prior quarter)N/AN/AUp ~7% vs Q2

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Adjusted OIBDAFY2025 (Calendar)~$200M ~$200M reaffirmed Maintained
Revenue (sequential)Q4 2025 vs Q3 2025Positive sequential growth Positive sequential growth reaffirmed Maintained
U.S. OTT SubscribersQ4 2025Positive sequential growth Positive sequential growth reaffirmed Maintained
Leverage (TTM)FY2025 Exit~3.1x ~3.1x reaffirmed Maintained
Canada Reporting & Revenue TreatmentFrom Q4 2025N/AStop reporting Canadian subs; recognize licensing in “linear & other” Operational change
Content Cash SpendFY2026~<$700M target “Just under $700M” reaffirmed; path to $600–$650M in following years Maintained / improving trajectory

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 2025, Q2 2025)Current Period (Q3 2025)Trend
IP ownership & slate “de‑aging”Plan to own half the slate by 2027; $1–$2M per hour savings; lower average cost vs historical; build library Fightland in production; late-stage co‑commission partner to improve economics; accretive to OIBDA/FCF in 2026 Accelerating
Canadian business modelCarriage dispute hit Canadian linear; low ARPU impact Shift from JV to licensing with Bell; stop reporting Canadian subs; revenue stability Simplified/stabilized
Bundling & churnBundling retention benefit >20%; ARPU mix stable; no rate hikes planned App churn near all‑time lows; pricing strategy to push users to month 7/13; mix 2/3 gross adds, 1/3 churn reduction this quarter Improving retention
M&A/AVOD diversificationExplore AVOD adjacency and linear brands repositioning; attractive valuation Focus on “marooned” linear brands into digital; no high‑leverage deals; strategic fit with demos Active evaluation
Content slate momentumStrong tentpoles planned (Outlander prequel, Force, Spartacus); BMF underperformed Outlander prequel drove engagement; Force launched well; Spartacus next; content pacing supports OTT growth Strengthening
Content cash spend trajectoryTarget ~$700M in 2026; $600–$650M beyond Reaffirm under $700M 2026; toward $600–$650M in following years Decreasing

Management Commentary

  • “STARZ reported a great quarter both operationally and financially… we are set to deliver on our post-separation plan of generating new revenue through content licensing and getting more ownership of series on the network at improved economics” — Jeffrey Hirsch, CEO .
  • “We are affirming our guidance for the remainder of the year… generating approximately $200 million of adjusted OIBDA for the year” — Scott Macdonald, CFO .
  • “We are moving from a joint venture model to a… content licensing agreement with… Bell Canada… [which] will be modestly accretive to adjusted OIBDA and free cash flow in calendar 2026” — Jeffrey Hirsch, CEO .
  • “Adjusted OIBDA… was expectedly down… due to higher advertising and marketing costs… [for] Outlander: Blood of My Blood… [and] Ballerina, which we aired a quarter earlier than originally planned” — Scott Macdonald, CFO .
  • “We expect investment in content to decrease year-over-year, helping drive improved free cash flow in calendar 2026” — Jeffrey Hirsch, CEO .

Q&A Highlights

  • Path to ~$200M Adjusted OIBDA: Management needs ~$52M in Q4; cadence driven by timing of programming amortization; confident in delivery and growth beyond 2025 as owned IP lowers costs .
  • Owned IP economics: Savings per hour from de‑aging shows and incremental international licensing; Fightland co‑commission to further improve per‑episode costs .
  • Churn and pricing strategy: App churn at all‑time lows; longer-term offers pushing users to month 7/13 materially reduce churn; bundling remains accretive to LTV .
  • Canada shift specifics: Licensing revenues expected to more than cover prior subscription revenues and provide stability; Canadian subs to be removed from reporting starting Q4 .
  • Content spend outlook: Just under $700M in 2026 with trajectory to $600–$650M over time as slate de‑ages and ownership increases .

Estimates Context

  • S&P Global consensus for STRZ appears unavailable or misaligned due to the post-separation reporting framework; management guidance was used for comparison where estimates were not reliable .
  • Attempted retrieval indicates inconsistent period mapping; therefore, we refrain from presenting consensus vs actual to avoid misleading comparisons. Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Sequential revenue growth and U.S. OTT sub gains resumed; near-term momentum should continue with Force and Spartacus, supporting Q4 delivery to ~$52M Adjusted OIBDA to hit the ~$200M FY target .
  • Operating losses reflect investment timing and higher D&A; the structural pivot to owned IP and Canada licensing should drive improved margins and cash conversion in 2026–2028 .
  • Bold: Execution on the Canada licensing model and cost discipline are likely to be near-term narrative drivers; successful delivery enhances confidence in deleveraging to ~3.1x and onward in 2026 .
  • OTT engagement strength and reduced churn (via pricing discipline and bundling) point to improving LTV dynamics without near-term rate hikes, sustaining subscriber growth organically .
  • Monitoring items: linear pressure vs OTT growth, timing of marketing spend around tentpoles, and the pace/scale of IP ownership (Fightland, Masquerade, Kingmaker, All Fours) moving toward 2027 .
  • Medium-term thesis: A more asset-light international profile, lower content cash spend, and owned IP economics should expand margins toward 20% exiting 2028 and improve FCF conversion .
Sources:  
Press release and 8‑K results (Q3 2025): **[929351_20251113LA24008:0]** **[929351_20251113LA24008:4]** **[929351_20251113LA24008:5]** **[929351_20251113LA24008:6]** **[929351_20251113LA24008:7]** **[929351_0000929351-25-000141_q325ex991earningsrelease.htm:2]** **[929351_0000929351-25-000141_q325ex991earningsrelease.htm:4]** **[929351_0000929351-25-000141_q325ex991earningsrelease.htm:5]**  
Earnings call transcript (Q3 2025): **[0000929351_2298361_1]** **[0000929351_2298361_2]** **[0000929351_2298361_3]** **[0000929351_2298361_5]** **[0000929351_2298361_8]** **[0000929351_2298361_7]**  
Prior quarter results (Q2 2025): **[929351_20250814LA51866:0]** **[929351_20250814LA51866:3]** **[929351_20250814LA51866:6]** **[929351_0000929351-25-000102_q225ex991earningsrelease.htm:2]** **[929351_0000929351-25-000102_q225ex991earningsrelease.htm:5]**  
Business update/Q1 context: **[929351_1963585_3]** **[929351_1963585_6]** **[929351_1963585_10]**  
Scheduling press release (Q3 2025): **[929351_20251013LA96616:0]**