Starz Entertainment Corp. Q4 FY2025 earnings call

• Subscriber growth: Driven by scripted originals in Q4. - Revenue details: Sequential growth from distribution revenue offset by declines in linear and OTT. - Balance sheet: Stable net debt and leverage. - Future focus: 2026 focus on increasing free cash flow, with unlevered free cash flow expected $80 - $120 million, positive equity free cash flow, and leverage expected to exit 2026 at ~2.7 times. - Programming: Slate set for connected year with shows like Canaan, P-Valley, Fightland; focus on bundling and distribution partnerships. - Content ownership: Working towards 60%+ slate ownership, with international sales and ancillaries in mind.

For the fourth quarter, total revenue was $323 million, up 60 basis points sequentially. Adjusted OIBDA was $56 million, up over 100% sequentially. Subscribers: STARS added 370,000 domestic OTT subscribers in the quarter, reaching 12.7 million customers. Total US subscribers grew to 17.6 million. Revenue contribution: Distribution revenue increased due to Canadian operations transition, offset by declines in linear and OTT revenue. Adjusted OIBDA for the year was $204 million, exceeding the $200 million outlook. Balance sheet: Net debt was $589 million, gross debt $625 million, cash $36 million, revolver undrawn. Leverage at end of 2025 was 2.9 times vs previous guidance of 3.1 times.

• 2026 unlevered free cash flow expected $80 - $120 million, positive equity free cash flow, ~$80 - $120 million improvement year over year. - Leverage expected to exit 2026 at approximately 2.7 times. - Margin improvement: Slight in 2026, lion's share in 2027 and 2028 with STARS originals becoming lion's share of programming slate.

Q: Brent Penter asks about total revenue, margin progress, M&A assets, capital allocation; A: Talks about margin improvement in 27 - 28, M&A focus on complementary assets within leverage constraint, capital allocation to invest in business then return to shareholders.

Q: Thomas Yeh asks about OTT subscriber retention, slate structure; A: Slate set for connected year, longer-term offers to push churn down, focus on bundling and distribution.

Q: David Joyce asks about cash flow cadence, production loans; A: Cash flow cadence improving, production loan for Fightland, originals to be green lit.

Q: Vikram Casavolta asks about Sky co-commission deal, pricing strategy; A: Sky right partner due to ongoing relationship, pricing underpriced vs broad-based streamers with room to raise as they do.

Q: David Karnofsky asks about reliance on spin-offs vs new originals, AI, development process; A: Franchising and spinoffs as platforms for new shows, AI used in content and internal training, development process with more control and international revenue opportunity since separating from Lionsgate