•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Starz Entertainment reported first-quarter fiscal 2026 results that beat internal expectations, driven by higher OTT revenue, improved adjusted OIBDA performance, and continued progress toward its long-term margin target. Management reaffirmed full-year guidance and said the company is pulling forward its adjusted OIBDA margin goal after exiting its Universal Pay-2 agreement.
Starz said first-quarter OTT revenue was $211 million, compared with $210 million in the fourth quarter of fiscal 2025. Total revenue was $307 million, down from $323 million sequentially, primarily due to the timing of Canadian licensing revenue.
Adjusted OIBDA was $58 million in the quarter, up sequentially from the prior quarter. The company attributed the improvement mainly to lower advertising and general and administrative expenses. On a year-over-year basis, adjusted OIBDA declined due to lower revenue and higher content amortization, partly offset by lower advertising and marketing expenses.
CFO Scott Macdonald said the adjusted OIBDA result was ahead of the company’s internal plan and supports Starz’s forecast for low single-digit full-year adjusted OIBDA growth. He also said quarterly adjusted OIBDA should be more consistent in 2026 than it was in 2025.
Unlevered free cash flow was $81 million in the quarter, up $147 million year over year. Equity free cash flow rose $136 million year over year to $69 million. Macdonald cautioned that the quarter benefited from lower content spending, which the company expects to catch up in the second quarter, and said Starz is not raising its free cash flow outlook at this time.
As of March 31, Starz reported net debt of $523 million and a leverage ratio of 3.1x. The company said it remains confident it can exit the year at approximately 2.7x leverage, with its $150 million revolver undrawn.
A central development in the quarter was Starz’s decision to exit its Pay-2 agreement with Universal. President and CEO Jeffrey Hirsch said the Universal titles were popular and had strong box office performance, but their results on Starz were lower than expected due to high subscriber overlap with Amazon, where the titles were heavily watched before reaching Starz in the Pay-2 window.
Hirsch said Starz was paying Pay-2 prices for library performance and plans to reinvest in other high-performing library titles with better economics, using internal data to identify content that can deliver similar results. He described the approach as “Moneyball,” saying Starz can evaluate library titles across the industry to recreate desired performance at lower cost.
Starz recorded a $139 million restructuring charge in the first quarter, mostly related to the write-off of content with limited strategic value for its platforms. Because the Universal agreement was entered into in April 2026, the Pay-2 restructuring charge will be recorded in the second quarter.
Executives said revised Universal terms will meaningfully reduce cash payment obligations beginning in 2027. As a result, Starz now expects to reach its 20% adjusted OIBDA margin target in the back half of 2027, a year earlier than the prior target of exiting 2028.
Management said Starz’s shift away from emphasizing subscriber counts is being validated by results. CFO Macdonald said pricing discipline, fewer low-priced entry offers, and more annual and multi-month plans helped drive sequential OTT revenue growth.
While Starz did not disclose ARPU directly, Macdonald said ARPU increased sequentially and is expected to continue building through 2026 as promotional subscribers move to higher retail rates. Starz recently raised its price to $11.99, with the increase beginning to flow through the subscriber base in the second quarter. During the call, executives said the April 1 price increase is “digesting really well” and is proceeding in line with expectations.
Starz also reported churn reached an all-time low during the quarter, reflecting reduced focus on acquiring low-value subscribers. Engagement was strong, with year-over-year engagement up about 8% in the quarter, according to executives.
Hirsch said Starz continues to shift toward content ownership to control costs and monetize intellectual property globally. The company’s first Starz-owned original, Fightland, is scheduled to premiere July 31. Starz previously announced Sky as a co-commission partner on the series, which Hirsch said improves unit economics.
Starz also greenlit an untitled Black rodeo drama set in Texas, with production expected to begin this fall. Executives said the project is another example of building the content library through ownership.
Upcoming and recent titles highlighted on the call included:
Hirsch said Starz remains on track to own 50% of its slate by 2027 and suggested the company could accelerate beyond that level. He cited projects including Fightland, the Black rodeo drama, Kingmaker, Masquerade and All Fours as examples of a fuller development pipeline.
Starz reaffirmed its full-year 2026 outlook, including OTT revenue growth versus 2025, low single-digit adjusted OIBDA growth, $80 million to $120 million of unlevered free cash flow, and year-end leverage of about 2.7x.
Macdonald said 2027 is shaping up to be a significant year for margin expansion and improved free cash flow due to restructuring benefits, increasing contributions from owned originals, and continued content cost reductions.
Hirsch said Starz sees two paths to value creation: growing the core business to achieve its margin target and pursuing disciplined M&A opportunities. He emphasized, however, that the company does not need M&A to maximize shareholder value given the strength and profitability of the core business.
Premium gym chains are entering a “golden era” that is ending or already in decline, as rising operating costs collide with shifting consumer preferences toward more flexible, community-based ways to exercise. Long-term memberships are shrinking, margins are pressured by higher rents and facility expenses, and competition from smaller, more personalized…
