Starz Entertainment NASDAQ: STRZ reported third-quarter revenue growth and reiterated its full-year outlook, citing higher over-the-top revenue, distribution gains from owned programming and continued progress on free cash flow and leverage reduction.
Total third-quarter revenue was $322 million, the company’s strongest quarter of 2026, according to CFO Scott Macdonald. OTT revenue reached $227 million, up 1.7% from a year earlier and 2.4% sequentially. On a pro forma basis excluding the effect of Starz’s shift in Canada to a content-licensing arrangement in late 2025, OTT revenue would have risen 3.2% year over year.
Macdonald said OTT growth reflected annual subscribers renewing at higher promotional prices as well as the continuing benefit of an April price increase. Linear and other revenue was $96 million, with ongoing pressure on traditional video households partly offset by increased distribution revenue tied to Starz’s strategy of owning more programming.
Profitability and Cash Flow
Adjusted OIBDA totaled $44 million during the quarter, coming in ahead of the company’s expectations and rising significantly from the prior year. Starz said its third-quarter outperformance allowed it to move part of its planned marketing investment into the fourth quarter to support the return of P-Valley.
Unlevered free cash flow was positive $19 million in the quarter and $85 million through the first nine months of 2026. Equity free cash flow was positive $13 million for the quarter and $48 million year to date.
Starz reaffirmed its expectations for mid-single-digit adjusted OIBDA growth in 2026 and unlevered free cash flow of $100 million to $120 million. The company continues to target a 20% adjusted OIBDA margin and leverage of 2.5 times or less in the second half of 2027.
- Cash content spending was $174 million in the third quarter.
- Full-year 2026 cash content spending is expected to remain below $600 million.
- Net debt stood at $601 million as of Sept. 30, with adjusted OIBDA leverage at 2.8 times.
- Starz expects to end 2026 with leverage of roughly 2.7 times.
The company previously increased its credit facilities by $100 million, including a $67 million increase in its Term Loan A and a $33 million increase in its revolver. Starz used the Term Loan A proceeds to repay its remaining programming notes, which carried higher interest rates. Macdonald said the refinancing is expected to improve annual free cash flow by about $4 million through lower cash interest expense.
Content Slate and Owned Programming
President and CEO Jeffrey Hirsch said the company’s content portfolio supported engagement during the quarter. The final season of Raising Kanan finished at an audience high, while Fightland, Starz’s first owned original, continued building on its debut. The company also highlighted Blood of My Blood, acquired series S.W.A.T. Exiles, and Lionsgate’s Michael, which Hirsch said became the best-performing Pay-One title in Starz history.
Starz is developing a second season of Fightland, according to Hirsch. He said the series’ production cost, audience response and international revenue from its Sky co-commission reinforced the company’s interest in retaining ownership of its programming. The company’s Bell Canada agreement and Sky arrangement have created international revenue opportunities, management said.
Looking ahead, P-Valley returns Dec. 4 for its third and final season. Alison Hoffman, president of Starz Networks, said the show’s teaser was the company’s best-performing teaser in more than two years. The series drew more than 11 million multiplatform viewers per episode in its second season, she said.
Starz also plans to debut the 18-episode first season of Power: Origins in 2027, along with its second owned original, an untitled Black Rodeo series currently in production. Hirsch said Starz expects to own roughly half of its slate in 2027 and more in 2028, which could support future international output agreements.
Bundling, Retention and Distribution
Management said its subscription strategy is increasingly focused on long-term revenue, retention and customer lifetime value rather than quarterly subscriber totals. Hirsch said subscribers who have remained on the Starz app for at least one year reached all-time highs in both number and share, while churn was at historic lows and average revenue per user continued to rise.
Hoffman said bundling arrangements have produced retention improvements of more than 20% in some cases and have been more accretive to revenue than standalone subscriptions. Starz cited early encouraging results from its Peacock relationship, Crunchyroll bundle and an Amazon Prime Video super bundle involving five services.
Hirsch said Starz’s wholesale-first model also provides some insulation from subscription-management tools, noting that about 70% of its business is wholesale and sold through partner platforms. The company’s strategy remains centered on maintaining a steady schedule of programming for its core audiences to limit cancellations.
Starz recently reached a new distribution agreement with Verizon Fios. Hirsch said the agreement had no material impact on the company’s guidance for 2026 or 2027 and described it as one of the company’s remaining legacy-style distribution arrangements.
While management said it sees potential opportunities to expand beyond its subscription-video-on-demand business into advertising-supported video, Hirsch emphasized that any transaction or strategic move would need to accelerate Starz’s strategy without adding excessive leverage or undermining the performance of its core business.
About Starz Entertainment (NASDAQ:STRZ)
Starz Entertainment Corp. is a media and entertainment company that operates premium subscription television and streaming services. Its offerings include the STARZ premium network, related linear television channels and the STARZ streaming platform, which provides original series, feature films and licensed entertainment content.
The company's programming has included original dramas, comedies and franchises, as well as a selection of theatrical and television movies. STARZ content is distributed through traditional pay-TV providers, digital platforms and direct-to-consumer subscriptions, with availability varying by market and distribution partner.
Starz was established in 1994 as a premium television service and was acquired by Lionsgate in 2016.
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