Starz closed Q3 with a wider loss, weaker revenue, and a sharper drag from linear. The company is leaning harder into OTT growth, content ownership, and cost discipline, but the gap between digital gains and linear erosion remains the central pressure point on its financials.
Linear Drops Hit Harder Than OTT Can Offset
Starz posted a net loss of 52.6 million, significantly higher than the 30.6 million loss a year ago. Revenue fell 8% to 320.9 million, narrowly missing expectations. Operating loss rose to 34.8 million.
U.S. subscribers declined by 130,000 to 17.5 million. Linear accounted for the entire drop, down 240,000 to 5.17 million. OTT remained the bright spot, adding 110,000 U.S. subs to reach 12.3 million and driving engagement to a twelve-month high, fueled by Outlander: Blood of My Blood and Ballerina.
North America ended at 19.2 million total subs. Canada rebounded after a carriage dispute was resolved, growing by 250,000 to 1.74 million. OTT in Canada remained flat at 68,000. Starz will stop reporting Canadian subscriber numbers beginning next quarter.
OTT revenue fell to 222.8 million from 232.2 million last year. Linear and other revenue fell to 98.1 million from 114.7 million. The shift toward digital continues, but total revenue continues to contract.
Canada Restructuring Signals a More Streamlined International Strategy
Starz is moving its Canadian business from a joint venture to a licensing agreement with Bell. Bell will operate the service while Starz collects international licensing revenue. The move reduces operational complexity and aligns with Starz’s broader plan to exit direct international operations while strengthening the economics of owned content.
Ending Canadian subscriber disclosures underscores a strategic shift toward revenue quality over geographic reporting.
Content Ownership and Spend Reduction Aim at Margin Expansion
The company expects cash content spend to fall to just under 700 million in 2026 and settle between 600 and 650 million thereafter. Starz is increasing its ownership stake in its slate, opening multiple writers rooms, and advancing production of Fightland, its first owned original. A co-commission partner is expected to bolster economics through reduced episode costs and expanding international rights.
The company reiterated expectations of roughly 200 million in adjusted operating income for 2025 and continues to target 20% margins by late 2028.
Consolidation as a Path to Scale
Starz is positioning itself to take advantage of increased media consolidation. With about 70% of its revenue already coming from digital, the company argues it can convert linear-heavy networks into streaming assets using its tech stack and audience expertise. Leadership stressed that any deal must align with its core demos and fit within its leverage targets.
Starz ended Q3 with $588.1 million in net debt and leverage of 3.4x adjusted OIBDA. The long-term target is 2.6 times, limiting the scope of potential acquisitions but not eliminating opportunities that can be integrated without adding substantial debt.
The Streaming Wars Take
Starz is making deliberate structural moves while still absorbing the impact of linear decline. The core digital metrics are improving, but not at a pace that offsets revenue and margin pressure. The next phase of execution will require tighter monetization of OTT subs, continued cost discipline, and rapid progress on content ownership.
Its approach in Canada and its emphasis on licensing over international operations suggest a cleaner, more margin-oriented business model. The push for selective M&A reflects a desire to add scale without stretching leverage, but the room for error remains limited.
The company’s ability to stabilize revenue while executing on a lower-cost, ownership-driven content pipeline will determine whether these strategic shifts translate to the margin profile it is targeting by 2028.
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