STRZ's fourth-quarter loss exceeds projections, with year-over-year revenue declining due to underperformance in OTT services

Starz Entertainment Reports Wider Q4 Loss, Revenue Slightly Beats Estimates

Starz Entertainment (STRZ) posted a loss of $0.47 per share for the fourth quarter of 2025, which was deeper than analysts’ expectations of a $0.20 loss per share. The company’s net loss came in at $1.24 per share, showing an improvement compared to the $1.90 per share loss reported in the same quarter last year.

Quarterly revenue reached $322.8 million, reflecting a 6.3% decrease from the prior year. Despite the decline, revenue edged past consensus estimates by 0.35%. On a sequential basis, revenue grew by 0.6%, mainly due to increased distribution income. This growth was largely driven by revenue from the transition of Starz’s Canadian business to a content licensing model, which was included in the linear and other revenue category.

Subscriber Growth in Q4

By the end of the quarter, Starz Entertainment counted 12.7 million U.S. OTT subscribers, an increase of 370,000 from the previous quarter. Overall U.S. subscribers reached 17.6 million, up by 170,000. The fourth quarter’s subscriber gains were fueled by strong demand for original scripted series such as “Force” and “Spartacus.”

Starz Entertainment Corp. Price, Consensus and EPS Surprise

Revenue Breakdown for Q4

OTT revenue totaled $210.3 million, making up 65.1% of total revenue, but this was a 12% drop from $239 million a year earlier. Revenue from linear and other sources rose 6.6% year over year to $112.5 million, accounting for 34.9% of total revenue.

Operational Highlights

The company’s operating loss narrowed to $4.7 million from $21.2 million in the same period last year. Adjusted OIBDA climbed to $55.5 million, up from $24.7 million a year ago, and increased by $33.7 million compared to the previous quarter—more than doubling quarter over quarter. This improvement was attributed to lower programming amortization, reduced advertising and marketing costs, and higher revenues.

Financial Position and Cash Flow

As of December 31, 2025, Starz Entertainment held $35.7 million in cash and cash equivalents, down slightly from $37 million at the end of September 2025. Net debt stood at $589.4 million, with an adjusted OIBDA leverage ratio of 2.9x over the past twelve months. The company’s $150 million revolving credit line remained unused at quarter’s end.

Net cash used in operating activities was $21.4 million for the quarter, and free cash outflow totaled $25.9 million.

Outlook for 2026

Looking ahead, Starz Entertainment anticipates modest growth in adjusted OIBDA for 2026, expecting a low single-digit percentage increase driven by ongoing strength in OTT revenue. The company projects generating between $80 million and $120 million in positive unlevered free cash flow, aiming to achieve positive equity-free cash flow for the business.

Starz expects to reduce its leverage to around 2.7x by the end of 2026, down from 2.9x, moving closer to its long-term target of 2.5x leverage.

Zacks Rank and Other Noteworthy Stocks

Currently, Starz Entertainment holds a Zacks Rank #3 (Hold). In the broader Consumer Discretionary sector, several stocks have higher Zacks rankings:

• Expedia, Inc. (EXPE) – Zacks Rank #1 (Strong Buy)
• Amer Sports, Inc. (AS) – Zacks Rank #2 (Buy)
• Crocs, Inc. (CROX) – Zacks Rank #2 (Buy)

• Expedia shares rose 11.5% over the past year, with a projected long-term earnings growth rate of 19.63%.
• Amer Sports shares climbed 27.5% over the past year, with a projected long-term earnings growth rate of 21.88%.
• Crocs shares declined 9.6% over the past year, with a projected long-term earnings growth rate of 6.43%.

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