Starz posts its most profitable quarter since splitting from Lionsgate, as streaming revenue climbs

Starz Entertainment Corp. reported its most profitable quarter since separating from Lionsgate Studios last year, posting a narrower net loss and more than doubling its core profitability measure as the premium network leans further into a subscription-only, streaming-first strategy built around fewer, bigger owned shows.

The company, which trades on Nasdaq under the ticker STRZ, posted revenue of $322.4 million for the quarter ended Sept. 30, up slightly from $320.9 million a year earlier, according to the earnings release it filed with the Securities and Exchange Commission on Thursday. The net loss narrowed to $34.8 million, or $2.02 a share, from $52.6 million, or $3.15 a share, in the same period last year. Both figures beat Wall Street's expectations — analysts had modeled a loss of roughly $2.96 a share on revenue of about $319.5 million — according to TheWrap, which was first to report on the results Thursday afternoon.

The numbers behind the turn

Adjusted operating income before depreciation and amortization, the profitability metric Starz highlights for investors, more than doubled to $44.2 million from $21.8 million a year earlier, the filing shows. Streaming revenue rose 1.7%, to $226.6 million, or 3.2% when a change to the company's Canadian operations is excluded; linear and satellite-television revenue fell 2.3%, to $95.8 million, continuing a long decline in traditional pay-TV distribution. The company generated $18.9 million in operating cash flow and $18.8 million in unlevered free cash flow for the quarter.

Net corporate debt stood at $600.7 million against $86.8 million of cash on hand, and the company's leverage ratio — net debt divided by trailing-twelve-month adjusted OIBDA — fell to 2.8 times, the lowest level since Starz became a standalone public company, according to the quarterly report it filed separately with regulators. Management reiterated every financial target it had previously set for 2026 and 2027, including positive year-over-year streaming revenue growth, mid-single-digit growth in adjusted operating income, unlevered free cash flow of $100 million to $120 million, leverage near 2.7 times by year-end, and a 20% adjusted operating margin in the back half of 2027.

A business built to shrink before it could grow

Starz used to be the pay-television arm of Lionsgate, the Santa Monica studio behind the "John Wick" and "Hunger Games" franchises. In May 2025, Lionsgate completed a corporate separation that split the company in two: a production and library business that kept the Lionsgate name, and the Starz premium network and its streaming app, which became an independent, Nasdaq-listed company. The split followed years of subscriber losses on traditional cable and satellite bundles, and it left the new Starz carrying debt and a shrinking linear business while it tried to prove its streaming app could stand on its own. The Hollywood Reporter has chronicled the volatile results that followed, including quarters with operating losses exceeding $150 million tied to one-time restructuring and content-impairment charges, several of which recur in this quarter's footnotes alongside the credits that helped narrow the headline loss.

Starz has also stopped giving Wall Street one number it once published every quarter: subscriber counts. The company told investors earlier this year that it would no longer disclose subscriber totals, starting with results for the first quarter of 2026. The last figures it gave, covering the period that ended in December 2025, showed domestic streaming subscribers at an all-time high of 12.7 million, alongside roughly 5 million remaining linear subscribers. Thursday's release instead emphasizes engagement — the company said viewers who have subscribed for a year or more are watching at record levels — as the metric it wants analysts to track instead.

Fewer shows, more ownership

The quarter's content slate leaned on a mix of franchise television and the company's push into owned programming, which it keeps a larger share of the economics from rather than licensing someone else's library titles. Results were lifted by the series finale of "Power Book III: Raising Kanan," the second season of "Outlander: Blood of My Blood," the military drama "S.W.A.T. Exiles," and the premiere of "Fightland," which the company describes as its first wholly owned original series and which is already being developed for a second season. A pay-television window for the Michael Jackson biopic "Michael" was, by the company's account, its best-performing Pay 1 film title to date.

Distribution partnerships also broadened Starz's reach this year. In July, the network launched a joint subscription with the anime service Crunchyroll on Amazon's platform, a tie-up Amazon detailed in its own announcement from Prime Video. In September, Starz joined four other services — AMC+, BritBox, MGM+ and PBS Masterpiece — in a five-network bundle on Prime Video priced at $29.99 a month, as TheWrap reported at the time, and it added a carriage agreement with Verizon Fios in October. Those deals matter for a network of Starz's size: without the scale of a Netflix or a Max, bundling has become its main lever for reaching subscribers who would not otherwise seek out a single niche app.

"The core business is operating so well right now," Chief Executive Jeffrey Hirsch told analysts on the company's earnings call, according to TheWrap, adding that "as our owned library grows, we expect to capture more of the economic value created by our content."

Chief Financial Officer Scott MacDonald described the quarter in similarly plain terms, saying, "Our financial story is simple: growing OTT revenue, expanding margins, growing free cash flow, and reducing leverage," according to the same report. Shares of Starz rose roughly 3% in after-hours trading following the release, TheWrap reported, a modest but positive reaction for a stock that has swung sharply over the past year as investors tried to price in the risks and rewards of its post-spinoff turnaround.

What comes next

Executives used the call to lay out a 2027 slate that leans further into company-owned shows, which Hirsch said account for roughly half of next year's planned programming and which he argued can generate $6 million to $9 million in profit per season once a title has built an audience. Planned titles include an expanded, 18-episode order for "Power: Origins" and an untitled drama centered on Black rodeo culture. Hirsch said the company is in no rush to launch an advertising-supported tier, telling analysts that "the industrial logic has to work" before Starz adds a cheaper, ad-supported option to its lineup — a notable contrast with larger rivals that have leaned hard into advertising to offset subscriber losses.

Longer term, the company has pointed to 2029 as the year its free cash flow should step up further, once payments tied to a licensing arrangement with Universal Pictures for theatrical films conclude in 2028. For now, Thursday's results give Starz something it has lacked since splitting from Lionsgate: a quarter in which nearly every metric management controls — revenue mix, margins, debt — moved in the direction it had promised investors, even as the business overall remains smaller and less profitable than it was as part of a larger studio conglomerate.