8-K: Starz Reports Q3 2025 Results: Revenue Down, OTT Growth Up

Starz Entertainment Corp. announced its third-quarter 2025 financial results, reporting a decline in revenue and an increased net loss, alongside strong U.S. OTT subscriber growth and reiterated 2025 outlook.

Summary

• Consolidated revenue for the quarter ended September 30, 2025, was $320.9 million, a decrease from $346.9 million in the prior year's third quarter.
• The company reported a net loss of $(52.6) million, or $(3.15) per share, for Q3 2025, compared to a net loss of $(30.6) million, or $(1.83) per share, in Q3 2024.
• Operating loss for Q3 2025 was $(34.8) million, worsening from an operating loss of $(17.0) million in Q3 2024.
• Adjusted OIBDA for Q3 2025 was $21.8 million, a significant decrease from $83.5 million in Q3 2024.
• U.S. Over-The-Top (OTT) subscribers reached 12.3 million as of September 30, 2025, representing a sequential increase of 110,000.
• Total U.S. subscribers decreased by 130,000 sequentially to 17.5 million, primarily driven by continued pressure on linear subscribers.
• Total North American subscribers (including Canada) increased by 120,000 sequentially to 19.2 million, with Canadian subscribers increasing by 250,000 due to the resolution of a carriage dispute.
• Engagement on the STARZ App reached a 12-month high during the period.
• Management reiterated all previously provided 2025 outlook.

Sentiment

Score: 5

Explanation: While the company reported strong operational growth in U.S. OTT and North American subscribers, and management reiterated its 2025 outlook, the financial performance showed significant declines in revenue, operating income, net loss, and Adjusted OIBDA compared to the prior year. The positive subscriber trends are offset by worsening profitability metrics, leading to a neutral overall sentiment.

Positives

• U.S. OTT subscriber growth of 110,000 sequentially, 520,000 year-to-date, and 670,000 year-over-year, reaching 12.3 million.
• Total North American subscribers increased by 120,000 sequentially to 19.2 million.
• Canadian subscribers increased by 250,000 in the quarter due to the resolution of a carriage dispute.
• Engagement on the STARZ App reached a 12-month high during the period.
• Management reiterated all previously provided 2025 outlook, suggesting confidence in meeting full-year targets.
• The $150 million revolving credit facility was undrawn at September 30, 2025.

Negatives

• Consolidated revenue decreased to $320.9 million in Q3 2025 from $346.9 million in Q3 2024.
• Net loss widened to $(52.6) million in Q3 2025 from $(30.6) million in Q3 2024.
• Operating loss increased to $(34.8) million in Q3 2025 from $(17.0) million in Q3 2024.
• Adjusted OIBDA significantly decreased to $21.8 million in Q3 2025 from $83.5 million in Q3 2024.
• Total U.S. subscribers decreased by 130,000 sequentially to 17.5 million, driven by continued pressure on linear subscribers.
• Total net debt stands at $588.1 million with a trailing twelve-month Adjusted OIBDA Leverage Ratio of 3.4x.

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 risks of 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.
• Potential effects of dispositions of businesses or assets, including individual films or libraries.
• Costs associated with defending intellectual property.
• Impact of technological changes and other trends affecting the entertainment industry.
• Potential adverse reactions or changes to business or employee relationships.
• 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 reiterated all previously provided 2025 outlook, indicating confidence in achieving their full-year targets despite the current quarter's financial performance. They expect to continue momentum to close out 2025 and deliver on their post-separation plan of generating new revenue through content licensing and improved economics for owned series. The company also anticipates an incredibly strong slate of originals airing over the next year to further scale its core audience.

Management Comments

• "STARZ reported a great quarter both operationally and financially, and we expect to continue our momentum to close out 2025."
• "It's been just six months since we became a standalone public company, and 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."
• "With an incredibly strong slate of originals airing on STARZ over the next year, we have a great opportunity to further scale our core audience of women and underrepresented audiences, while also delivering significant value for shareholders."

Industry Context

The results reflect a broader industry trend of shifting consumption from traditional linear television to Over-The-Top (OTT) streaming services. While Starz experienced a decline in total U.S. subscribers due to linear pressure, its U.S. OTT subscriber growth and increased app engagement align with the ongoing cord-cutting phenomenon and the increasing demand for digital content platforms. The focus on "women and underrepresented audiences" and "boundary-breaking originals" indicates a strategy to carve out a niche in a competitive streaming landscape, aiming for differentiation in a crowded market.

Stakeholder Impact

• Shareholders: Potential for value creation through strategic content licensing and improved economics, but current quarter's financial decline and increased net loss could raise concerns about profitability. Reiteration of 2025 outlook aims to reassure.
• Customers (Subscribers): Continued growth in OTT subscribers and resolution of a Canadian carriage dispute indicate a positive trend for customer access and satisfaction, especially with high app engagement and a strong slate of originals.
• Employees: The mention of "labor disruptions and strikes" as a risk factor suggests potential impact, though no specific current issues are detailed.
• Creditors: The company's net debt of $588.1 million and a leverage ratio of 3.4x, along with an undrawn revolving credit facility, provide insight into its financial health and ability to meet obligations.

Next Steps

• Hold an analyst and investor conference call on November 13, 2025, at 5:00 p.m. ET / 2:00 p.m. PT to discuss results.
• Continue to deliver on the post-separation plan of generating new revenue through content licensing and gaining more ownership of series at improved economics.
• Air an "incredibly strong slate of originals" over the next year to further scale the core audience of women and underrepresented audiences.

Key Dates

Recommendation

The company presents a mixed bag of results. While operational metrics like U.S. OTT subscriber growth and app engagement are strong, indicating a successful pivot to streaming, the financial performance shows significant deterioration with declining revenue, increased operating losses, and a lower Adjusted OIBDA. Management's reiteration of the 2025 outlook suggests these results were anticipated, but the widening losses are a concern. The resolution of the Canadian carriage dispute is a positive, but the continued pressure on linear subscribers highlights ongoing challenges. Given the strong operational momentum in streaming offset by financial headwinds, a "hold" recommendation is appropriate as investors await further clarity on the path to profitability and the impact of new content initiatives.

Keywords

Starz, STRZ, Q3 2025 Earnings, Financial Results, OTT Subscribers, Streaming, Media, Entertainment, Video on Demand, Subscriber Growth, Operating Loss, Adjusted OIBDA, Net Debt, Content Licensing, Corporate Governance