The Great Shedding: Why Starz Is Poised to Capitalize on Media Sector Consolidation

The media industry is undergoing a seismic shift. As traditional linear TV declines and streaming platforms dominate consumer attention, Starz (STRZ) stands at the forefront of a "great shedding" era—a period where legacy media companies divest non-core linear assets to focus on high-margin digital growth. Post-spinoff from Lionsgate, Starz is uniquely positioned to acquire undervalued linear assets, leveraging its newly independent balance sheet, advanced technology platform, and strategic focus on owned intellectual property. For investors, this represents a compelling long-position opportunity in a consolidating sector.

The "Great Shedding" is Here—And Starz Is Ready to Buy

The media sector's transition from linear to streaming is accelerating. Companies like Comcast (which plans to spin off NBCUniversal's cable networks into a standalone entity) and Warner Bros. Discovery (WBD) are reorganizing to separate declining linear assets from streaming and studio businesses. This creates a fire sale of undervalued linear assets, which Starz can acquire at discounted prices while competitors focus on growth.

Why Starz?
1. Financial Independence:
- Post-spinoff, Starz has $66 million in cash and a net debt of $559 million, with a target to reduce its leverage ratio to 2.5x from 3.1x by 2026. This deleveraging plan provides flexibility for opportunistic acquisitions.
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1. Tech-Driven Integration:

2. Starz's advanced platform, including its STARZ app, enables seamless integration of acquired linear assets. The company's focus on owned IP (e.g., Power, Outlander) ensures long-term revenue streams, while its data analytics tools optimize content distribution and subscriber retention.

3. Strategic Acquisitive Momentum:

4. Starz's $700 million annual content spend target (down from $800 million) leaves room to reallocate capital toward acquisitions. With $201.5 million in Adjusted OIBDA in FY2025, Starz has the cash flow resilience to outbid private equity firms for distressed assets.

Risks? Yes. But the Upside Outweighs Them

The path isn't without hurdles.

• Regulatory Uncertainty: Antitrust scrutiny could delay acquisitions. However, Starz's focus on non-strategic, non-competitive linear assets (e.g., regional sports networks or niche cable channels) reduces regulatory risk.
• Streaming Saturation: Competitors like Netflix and Disney+ dominate the market. Starz mitigates this by targeting underrepresented audiences (e.g., through its BMF and Power franchises) and leveraging its OTT subscriber growth (up 2% to 18 million in Q4 2024).

STRZ: A Must-Hold Consolidator Play

Starz is a rare bird in the media space: financially agile, strategically focused, and operationally ready to capitalize on industry-wide restructuring. Its recent Q1 2025 results, including a $93.3 million Adjusted OIBDA beat, underscore its ability to thrive amid turbulence.

Buy STRZ for:
- Asset Acquisition Catalysts: Look for deals in 2025 as legacy players divest.
- Margin Expansion: Lower content costs and higher owned-IP revenue will boost profitability.
- Multiple Expansion: A leaner, focused Starz could re-rate as a streaming pure-play.

Action Item: Initiate a long position in STRZ with a 12–18 month horizon. Set a target price of $18 (30% upside from current levels) based on a 10x EV/EBITDA multiple—a discount to peers but achievable if acquisitions drive growth.

Conclusion: The Future of Media Belongs to the Bold

The "great shedding" won't last forever. Starz's combination of financial firepower, tech-driven scalability, and strategic discipline positions it to buy low and sell high—turning today's distressed assets into tomorrow's cash cows. For investors willing to act now, Starz isn't just a stock—it's a blueprint for winning in the next era of media consolidation.

Invest with conviction—Starz is writing the next chapter.