- Starz reported a net loss of $189.4 million, or $11.27 per share, on revenue of $307.9 million.
- Excluding a $147 million restructuring charge tied to its exit from a Universal Pay-2 film deal, its net loss narrowed slightly year over year to $42.2 million, or $2.27 per share.
- The company remains on track to convert 70% of its adjusted operating income into free cash flow and raised its forecast for both metrics. It also continues to expect positive year over year streaming revenue growth for the year.
Starz posted a second-quarter net loss that widened to $189.4 million thanks largely to a pricey termination fee from dropping its Pay-2 film deal with Universal.
Excluding the $147 million charge, it would’ve lost $42.2 million, or $2.27 a share, narrower than its loss of $42.5 million from a year ago. Total revenue, meanwhile, fell 3.6% to $307.9 million. Analysts, on average, forecasted revenue of $306.76 million and a loss of $1.63 a share, according to Yahoo Finance.
In addition to the restructuring charge, Starz’s quarterly results were weighed down by its linear TV business, which suffered a 12% drop in revenue to $87 million as pay TV audiences continue to erode.
But streaming continued to show progress, with revenue climbing 0.1% to $221.3 million. It marked a return to year-over-year revenue growth for the first time since the fourth quarter of 2024.
The gains in streaming were driven by the finale of “Outlander,” the premiere of “Raising Kanan” Season 5 and “The Housemaid,” which generated the second-highest audience engagement quarter of all time and the fourth consecutive quarter of engagement growth since its separation from Lionsgate.
As of the end of 2025, Starz’s Canada business transitioned from a distribution partnership with Bell Media to a content licensing model. When excluding a negative impact of $3 million related to its Canada operations in the prior-year-period, streaming revenue would’ve increased 1.4%.
During the quarter, Starz launched a partnership with Peacock to be made available as an add-on on the platform, expanding its reach to the Comcast-owned streamer’s 48 million subscribers. It also launched a new bundle with Crunchyroll through Prime Video.
Starz no longer reports subscriber figures on a quarterly basis, following in the footsteps of major players Netflix, Disney and Warner Bros. Discovery, but last disclosed in February a total of 12.7 million over-the-top subscribers and 5 million linear TV subscribers.
Elsewhere, adjusted operating income came in at $60 million for the quarter. Starz anticipates that adjusted operating income will fall to the mid-30s in its third quarter due to higher programming costs from the airing of “Raising Kanan” Season 5, “Fightland” Season 1 and “Blood of my Blood” Season 2, but forecasted it would finish the year in the mid-60s.
Starz ended the quarter with $59.6 million in cash and cash equivalents, total debt of $625.1 million and unlevered free cash flow of -$14.7 million. Cash content spend was $182 million during the quarter. After exiting its Universal deal, Starz expects to report cash content spend below $600 million for the year.
Starz also obtained commitments to increase its credit facilities by $100 million, including a $67 million increase to its term loan and $33 million increase to its revolver, which is expected to close in the third quarter.
“Importantly, this transaction is not being undertaken to fund operations or support liquidity needs. Rather, it allows us to replace the remaining balance of our programming notes, which are working capital facilities that carry significantly higher interest costs than our credit facilities,” Starz Chief Financial Officer Scott Macdonald said. “By refinancing these obligations into lower-cost corporate debt, we expect to improve annual free cash flow by approximately $4 million through lower cash interest expense while simplifying our capital structure.”
Looking ahead, Starz President and CEO Jeff Hirsch told analysts that improved visibility into the second half of the year and the early performance of “Fightland” increase the company’s confidence that 2026 is shaping up to be a “more significant inflection year” than previously anticipated.
In addition to “Fightland,” other upcoming content coming to Starz includes the return of “P-Valley,” “Outlander: Blood of my Blood” Season 2 and the “Michael” biopic. The “Untitled Black Rodeo Show” is also starting production this month and several other Starz-owned projects are in development.
Starz reaffirmed its outlook for positive year over year streaming revenue growth and expects continued improvement in average revenue per user growth in the second half of the year as promotional subscribers convert to retail rates following its April price increase. It also maintained its forecast of an adjusted operating leverage ratio of approximately 2.7 times exiting 2026 and a 20% adjusted operating margin target for the second half of 2027.
Additionally, Starz raised its adjusted operating income outlook from low-single-digit to mid-single-digit growth and its free cash flow outlook from between $80 million and $120 million to the mid-to-upper end of the range.
While Starz remains focused on executing against its operating plan, Hirsch said that management remains open to pursuing M&A opportunities that accelerate the company’s strategy and creates value beyond what it can achieve organically.
MacDonald added that 2029 is shaping up to be a significant year for free cash flow growth due to the timing of final cash payments to Universal in 2028.
“The financial story for Starz is getting stronger and simpler every quarter: growing OTT revenue, expanding margins, growing free cash flow, and reducing leverage,” MacDonald said in prepared remarks to analysts. “We’re confident in our trajectory, and we look forward to continuing to demonstrate our progress.”
More to come…
