STRZ's Q4 Loss Wider Than Expected, Revenues Fall Y/Y on OTT Weakness

Starz Entertainment STRZ reported a fourth-quarter 2025 loss of 47 cents per share, wider than the Zacks Consensus Estimate of a 20-cent loss.

The company reported a net loss of $1.24 per share. This indicates a narrower loss from the year-ago quarter's loss of $1.90 per share.

Fourth-quarter 2025 revenues declined 6.3% year over year to $322.8 million but modestly surpassed the consensus estimate by 0.35%. However, revenues increased 60 basis points sequentially, driven by higher distribution revenues. The increase was largely attributable to revenues recognized during the quarter related to the transition of its Canadian operations to a content licensing model, which was recorded under the linear and other revenue segment.

STRZ's Subscriber Metrics Details

Starz Entertainment ended the quarter with 12.7 million U.S. OTT subscribers, representing a sequential increase of 370,000 subscribers. Total U.S. subscribers increased to 17.6 million, up 170,000 from the prior quarter. The increase in subscribers in the seasonally strong fourth quarter was driven by demand for scripted originals, including Force and Spartacus.

Starz Entertainment Corp. Price, Consensus and EPS Surprise

Starz Entertainment Corp. price-consensus-eps-surprise-chart | Starz Entertainment Corp. Quote

STRZ's Q4 Revenue Breakdown

OTT revenues totaled $210.3 million (65.1% of total revenues), down 12% from the prior year's $239 million. Linear and other revenues came in at $112.5 million (34.9% of total revenues), up 6.6% year over year from $105.5 million.

STRZ's Operating Performance

Operating loss improved to $4.7 million, compared with a loss of $21.2 million in the year-ago quarter. Adjusted OIBDA increased to $55.5 million from $24.7 million in the prior-year quarter and grew $33.7 million sequentially, representing growth of more than 100% quarter over quarter. The improvement was driven by lower programming amortization, reduced advertising and marketing expenses and higher revenues.

STRZ's Balance Sheet & Cash Flow

As of Dec. 31, 2025, Starz Entertainment had $35.7 million in cash and cash equivalents, down from $37 million as of Sept. 30, 2025. Total net debt stood at $589.4 million with an adjusted OIBDA leverage ratio of 2.9x on a trailing 12-month basis.

The company's $150 million revolving credit facility remained undrawn at the end of the quarter.

Net cash used in operating activities was $21.4 million in the fourth quarter of 2025. Starz Entertainment reported a free cash outflow of $25.9 million in the reported quarter.

STRZ's 2026 Outlook

For 2026, Starz Entertainment expects a solid performance, projecting low single-digit percentage growth in adjusted OIBDA compared with 2025, supported by continued momentum in OTT revenue.

STRZ anticipates generating between $80 million and $120 million in positive unlevered free cash flow, converting the business to positive equity-free cash flow.

On the balance sheet front, the company expects to end 2026 with leverage of approximately 2.7x, down from the current 2.9x level. This represents STRZ’s continued progress toward achieving its stated long-term leverage target of 2.5x.

STRZ’s Zacks Rank & Stocks to Consider

Currently, Starz Entertainment carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader Consumer Discretionary sector are Expedia, Inc. EXPE, Amer Sports, Inc. AS and Crocs, Inc. CROX. While Expedia currently sports a Zacks Rank #1 (Strong Buy), Amer Sports and Crocs carry a Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.

Expedia shares have returned 11.5% over the past year. EXPE’s long-term earnings growth rate is projected at 19.63%.

Amer Sports shares have appreciated 27.5% over the past year. AS’ long-term earnings growth rate is projected at 21.88%.

Crocs’ shares have declined 9.6% over the past year. CROX’s long-term earnings growth rate is projected at 6.43%.

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