Starz Entertainment Corp.

What they do

Starz operates the STARZ branded premium subscription video services, distributing through over-the-top (OTT) streaming platforms, its direct-to-consumer Starz App, and wholesale U.S. and Canadian multichannel video programming distributors (MVPDs) such as cable, satellite, and telecom providers. The company also holds international operations, but after restructuring, Canada moved to a content licensing arrangement and India/Southeast Asia were transferred to New Lionsgate. Starz is a single reportable segment, Starz Networks.

Revenue drivers

• Domestic OTT subscriptions — Direct-to-consumer subscriptions via the Starz App and OTT platforms; the company reported positive year-over-year OTT revenue growth in Q2 2026.
• Wholesale MVPD distribution — Traditional U.S. and Canada cable, satellite, and telecom distributors; revenue from these affiliates is tied to customer relationships that are amortized based on current revenue relative to estimated future revenue.
• Content licensing — Following the Canada operational change, Starz now earns content licensing revenue from its partner; this is a non-core but contributing revenue stream.

Recent performance

For Q2 2026 (quarter ended June 30, 2026), Starz reported revenue of $307.9 million, an operating loss of $(175.5) million largely due to a non-recurring restructuring charge, and Adjusted OIBDA of $59.9 million. Net cash used in operating activities was $(28.2) million, and Unlevered Free Cash Flow was $(14.7) million. As of June 30, 2026, cash and equivalents were $59.6 million, total debt was $625.1 million (including a $300.0 million Term Loan A facility and $325.1 million in senior unsecured notes), and the $150.0 million revolver was undrawn. Adjusted OIBDA Leverage Ratio was 2.9x on trailing twelve-month Adjusted OIBDA of $195.2 million. Revenue has been roughly flat sequentially: $319.7M (Q1 2026), $320.9M (Q2 2026), $306.9M (Q3 2026), and $307.9M (Q4 2026).

Strategy

Starz is rationalizing its content portfolio to right-size costs in response to declines in traditional linear services and standalone operations. In April 2026, it terminated certain live-action films under a post pay-one output licensing agreement, recognizing programming contract termination fees. The company is emphasizing its ownership strategy, citing the success of the 'Fightland' premiere, and is focused on driving OTT revenue growth and achieving leverage reduction. Management targets a 20% Adjusted OIBDA margin in the second half of 2027.

Risks

• Content portfolio rationalization — Actions to cancel or abandon programming and terminate output agreements may reduce future content availability and audience engagement.
• Continued linear subscriber declines — Traditional MVPD distribution is declining, pressuring wholesale revenue and requiring OTT to offset the losses.
• High leverage and liquidity constraints — As of June 30, 2026, total debt of $625.1 million against cash of $59.6 million, with Adjusted OIBDA leverage at 2.9x, limits financial flexibility.
• Restructuring and one-time charges — Non-recurring restructuring charges (e.g., $175.5M operating loss in Q2 2026) could recur and continue to pressure reported profitability.

Outlook

Management raised its 2026 outlook for Adjusted OIBDA growth from low-single-digits to mid-single-digits and for Unlevered Free Cash Flow from $80–120 million to the mid-to-upper end of that range. The company reiterates positive year-over-year OTT revenue growth and a year-end Adjusted OIBDA leverage ratio of approximately 2.7x. Management expressed confidence that 2026 is becoming a more meaningful inflection year for Starz than anticipated.