8-K: Starz Exceeds 2025 Outlook, Eyes 2026 Growth & Deleveraging

Starz Entertainment Corp. reported strong fourth-quarter 2025 results, exceeding all financial guidance and projecting significant growth and deleveraging in 2026.

Summary

• Grew Q4 2025 revenue sequentially to $322.8 million.
• Improved Q4 2025 operating loss to $(4.7) million.
• Grew Q4 2025 Adjusted OIBDA to $55.5 million.
• Achieved $204.0 million in annual trailing-twelve month Adjusted OIBDA.
• Management achieved or exceeded all previously provided 2025 outlook.
• Grew OTT and total subscribers sequentially by 370,000 and 170,000, respectively.
• Domestic OTT subscribers reached an all-time high of 12.7 million, up 890,000 or 7.6% year-over-year.
• Ended the quarter with total net debt of $589.4 million and an Adjusted OIBDA Leverage Ratio of 2.9x.

Sentiment

Score: 7

Explanation: StockSavvy.ai views this as a positive report, reflecting strong operational execution and exceeding guidance, with a clear path for future growth and deleveraging, despite ongoing net losses.

Positives

• Sequential revenue growth in Q4 2025 to $322.8 million.
• Significant improvement in Q4 2025 operating loss to $(4.7) million from $(21.2) million in Q4 2024.
• Growth in Q4 2025 Adjusted OIBDA to $55.5 million.
• Achievement or exceeding of all previously provided 2025 financial outlook.
• Sequential growth in OTT subscribers by 370,000, reaching an all-time high of 12.7 million domestic OTT subscribers.
• Year-over-year domestic OTT subscriber growth of 890,000 or 7.6%.
• Total U.S. subscribers increased by 170,000 sequentially to 17.6 million.
• Adjusted OIBDA Leverage Ratio of 2.9x outperformed deleveraging expectations.
• Undrawn $150 million revolving credit facility provides financial flexibility.

Negatives

• Reported a net loss of $(20.7) million for Q4 2025.
• Total revenue for Q4 2025 ($322.8 million) was lower than Q4 2024 ($344.5 million).
• Trailing-twelve month operating loss was $(208.7) million.
• OTT revenue for Q4 2025 ($210.3 million) was lower than Q4 2024 ($239.0 million).
• Total Starz Networks Subscribers decreased from 19.93 million as of 12/31/2024 to 17.63 million as of 12/31/2025.
• Linear Subscribers in the U.S. and Canada continued to decline.

Risks

• Uncertainty regarding the benefits and unexpected costs related to the separation of Lionsgate's Studios Business and STARZ Business.
• Substantial capital investment required to produce and market films and television series, with potential for budget overruns.
• Limitations imposed by credit facilities and notes.
• Unpredictability of the commercial success of programming.
• Risks related to the acquisition and integration of acquired businesses.
• Effects of dispositions of businesses or assets, including individual films or libraries.
• The cost of defending intellectual property.
• Technological changes and other trends affecting the entertainment industry.
• Potential adverse reactions or changes to business or employee relationships.
• The impact of global pandemics on the business.
• Weakness in the global economy and financial markets, including a recession and past and future bank failures.
• Wars, terrorism, and multiple international conflicts that could cause significant economic disruption and political and social instability.
• Labor disruptions and strikes.

Future Outlook

Management provides a 2026 outlook expecting to grow Adjusted OIBDA and OTT revenue, delever to approximately 2.7x, and significantly improve free cash flow.

Management Comments

• "Just nine months after our separation, we are beginning to see the full impact of operating as a standalone company."
• "We exceeded all our financial guidance in 2025 and expect 2026 to be a positive financial inflection point for the company as we enter the year with record-high OTT subscribers and a balance sheet that outperformed our deleveraging expectations."
• "With a disciplined investment strategy, a more efficient operating model, and one of our strongest programming slates to date, we are poised to drive sustainable OTT revenue growth, expand profitability, and improve free cash flow as we execute against our long-term targets."

Industry Context

StockSavvy.ai notes that Starz's focus on sequential subscriber growth and improved profitability aligns with broader industry trends where streaming services are prioritizing sustainable business models over pure subscriber acquisition at any cost. The emphasis on original scripted content like 'Power Book IV: Force' and 'Spartacus: House of Ashur' is crucial for differentiation in a competitive streaming landscape, mirroring strategies employed by major players to reduce churn and attract new viewers.

Stakeholder Impact

• Shareholders: Positive impact due to exceeding 2025 guidance, strong subscriber growth, improved profitability metrics (OIBDA, operating loss), and a positive 2026 outlook for growth and deleveraging.
• Customers (Subscribers): Positive impact from continued investment in "strongest programming slates to date" and scripted originals, driving subscriber growth.
• Creditors: Positive impact from improved leverage ratio (2.9x, outperforming expectations) and an undrawn revolving credit facility, indicating stronger financial health and ability to meet debt obligations.
• Employees: Potential positive impact from a more efficient operating model and a company poised for growth, though restructuring costs were noted in the past.

Next Steps

• Hold an analyst and investor conference call on Thursday, February 26, 2026, at 5:00 p.m. ET / 2:00 p.m. PT to discuss results.
• Execute against long-term targets to drive sustainable OTT revenue growth, expand profitability, and improve free cash flow in 2026.

Key Dates

Recommendation

The company significantly outperformed its 2025 financial guidance and demonstrated strong sequential growth in key operational metrics like OTT subscribers and Adjusted OIBDA. The positive 2026 outlook, projecting further Adjusted OIBDA and OTT revenue growth, along with deleveraging to ~2.7x and improved free cash flow, indicates a strong turnaround post-separation. The improved operating loss and robust subscriber acquisition, driven by successful original content, suggest a positive trajectory for future profitability and shareholder value, making it an attractive investment.

Keywords

Starz, STRZ, Earnings, Q4 2025, Financial Results, OTT Subscribers, Streaming, Media, Entertainment, Adjusted OIBDA, Net Debt, Leverage Ratio, Guidance, Subscriber Growth