The vibe and focus of Starz’ first financial results as a standalone company unveiled Thursday were of a fresh start after the premium cable and streaming platform separated from Lionsgate.
And it’s the U.S. subscriber gains at Starz that had analysts looking beyond the $177.4 million restructuring charge for the company’s content slate when considering the partial results for the first three months of the year. “Importantly, the results showed stronger than expected momentum in U.S. OTT (over-the-top) subscriber net adds at +530,000, driven by the late-in-the-quarter original Power: Raising Kanan season 4 premiere,” Seaport Research Partners analyst David Joyce said in a May 30 investment note.
Shares in a standalone Starz jumped by $3.12, or 19 percent, to $19.63 during late morning trading on Friday in the wake of the first partial financials report. Starz ended the quarter with 12.3 million U.S. streaming subscribers, up 530,000 from the prior quarter, and overall U.S. subscribers reached 18 million, up 320,000 customers from the prior period, again on the strength of the late-quarter premiere for Power Book III: Raising Kanan.
Total North American subscribers were 19.6 million, down 330,000 from the prior quarter due to a linear TV carriage dispute in Canada that removed Starz from a bundle. Starz completed its split from Lionsgate’s film and TV studio in early May.
Starz president and CEO Jeffrey Hirsch told analysts on a late-Thursday conference call that his now standalone company would look to reduce content costs and rebuild its IP production and program library to maintain subscriber growth. “As a separate company, we’ll start to unwind that pressure of cost on the content side and really start to stand up our IP factory again and start to build our own library and take real control of the cost side of the business,” Hirsch explained.
Ahead of that push, Starz recorded a restructuring charge of $177.4 million, due mainly to a “strategic reassessment” of its content portfolio. During the same period of 2024, Starz recorded a one-time content impairment charge of $29.4 million to restructure its international business.
TD Cowen analyst Doug Creutz in his own May 30 investment note argued Starz building its own IP library, and no longer doing so through Lionsgate Studios, will bring dividends. “Starz now should be able to participate in upside from its projects, while still outsourcing funding and film production to external studios, including (Lionsgate),” Creutz wrote.
Debt reduction has also become a priority for Starz. “Right now, we’re laser focused on de-levering down to 2.5X , and that’s our focus,” Hirsch said of his company bringing down its debt-to-EBITDA ratio during the analyst call.
For the quarter to March 31, 2025, Starz reported total revenue of $330.6 million, down from a year-earlier $352.4 million, and widened operating loss of $136.3 million, against a $30.8 million operating loss in the same period of 2024. The adjusted OIBDA came to $93.3 million, up from a year-earlier $45.5 million.
Creutz added, “We believe Starz’s improved content slate in 2025 (after a year when the pipeline was affected by the 2023 Hollywood strikes), featuring new seasons of flagship franchises and promising new originals, could help stabilize the subscriber base, but this remains a ‘show me’ story until proof arrives in the form of steady quarterly performance.”
