Starz Plunges to $42.5M Loss Post-Lionsgate Split Amid Revenue Slide

TL;DR

**STRZ is bleeding cash post-split, and their content strategy isn't cutting it; avoid until they prove a path to profitability.**

AI Summary

STARZ ENTERTAINMENT CORP. (STRZ) reported a significant net loss of $42.5 million for the three months ended June 30, 2025, a sharp decline from a net income of $4.2 million in the same period of 2024. Total revenue decreased by 8.0% to $319.7 million from $347.6 million year-over-year, driven by a 5.7% drop in OTT revenue to $221.1 million and a 12.8% decrease in linear and other revenue to $98.6 million. Operating loss widened to $26.9 million from an operating income of $10.1 million in Q2 2024. Programming amortization expenses increased to $162.5 million from $147.9 million, and advertising and marketing costs decreased to $63.4 million from $82.7 million. The company completed its separation from Old Lionsgate on May 6, 2025, becoming a standalone public entity. Restructuring activities, including content impairments totaling $456.7 million since inception, continue to impact financial results, with the company abandoning certain programming with limited strategic purpose.

Why It Matters

This filing reveals STARZ's challenging financial position immediately following its separation from Lionsgate, with a substantial net loss and declining revenue. For investors, this indicates significant headwinds for the newly independent company, raising questions about its standalone profitability and growth strategy in a highly competitive streaming market dominated by larger players like Netflix and Disney+. Employees may face further restructuring as the company continues to evaluate content performance and strategic purpose. Customers could see changes in programming offerings as STARZ abandons content. The broader market will watch how this separation impacts the competitive landscape of premium content, especially given the ongoing consolidation and intense battle for subscriber attention.

Risk Assessment

Risk Level: high — The company reported a net loss of $42.5 million for the quarter, a significant deterioration from a $4.2 million net income in the prior year. Total revenue declined by $27.9 million, or 8.0%, to $319.7 million. Furthermore, STARZ has incurred content impairment charges of $456.7 million since the inception of its restructuring plan, indicating ongoing challenges in content monetization and strategic direction.

Analyst Insight

Investors should exercise extreme caution and consider holding off on STRZ shares until the company demonstrates a clear path to profitability and revenue stabilization. Monitor future filings for evidence of successful content strategy adjustments and a reversal in the negative financial trends, particularly the net loss and declining revenue figures.

Financial Highlights

debt To Equity

0.86

revenue

$319.7M

operating Margin

-8.4%

total Assets

$2,091.6M

total Debt

$611.7M

net Income

-$42.5M

eps

-$2.54

gross Margin

49.2%

cash Position

$51.6M

revenue Growth

-8.0%

Revenue Breakdown

Key Numbers

• $42.5M — Net Loss (for the three months ended June 30, 2025, compared to $4.2M net income in Q2 2024)
• $319.7M — Total Revenue (for the three months ended June 30, 2025, down 8.0% from $347.6M in Q2 2024)
• $221.1M — OTT Revenue (for the three months ended June 30, 2025, down 5.7% from $234.4M in Q2 2024)
• $98.6M — Linear and Other Revenue (for the three months ended June 30, 2025, down 12.8% from $113.2M in Q2 2024)
• $26.9M — Operating Loss (for the three months ended June 30, 2025, compared to $10.1M operating income in Q2 2024)
• $162.5M — Programming Amortization (for the three months ended June 30, 2025, up from $147.9M in Q2 2024)
• $456.7M — Content Impairment Charges (incurred from the inception of the restructuring plan through June 30, 2025)
• 16.7M — Common Shares Outstanding (as of August 11, 2025)
• $51.6M — Cash and Cash Equivalents (as of June 30, 2025, up from $17.8M as of March 31, 2025)
• $611.7M — Debt (as of June 30, 2025, down from $699.9M as of March 31, 2025)

Key Players & Entities

• STARZ ENTERTAINMENT CORP. (company) — registrant and subject of the 10-Q filing
• Old Lionsgate (company) — former parent company of Starz Business
• Lionsgate Studios Holding Corp. (company) — newly formed entity holding the LG Studios Business
• New Lionsgate (company) — renamed Lionsgate Studios Corp., accounting spinnor
• SEC (regulator) — Securities and Exchange Commission
• Nasdaq Stock Market LLC (company) — exchange where STRZ common shares are registered
• June 30, 2025 (date) — end of the reported quarterly period
• May 6, 2025 (date) — date of the Separation completion
• British Columbia, Canada (location) — jurisdiction of incorporation for Starz Entertainment Corp.
• Vancouver (location) — principal executive office location for Starz Entertainment Corp.

FAQ

Risk Factors

• Significant Net Loss and Widening Operating Loss [high — financial]: The company reported a net loss of $42.5 million for Q2 2025, a substantial shift from a $4.2 million net income in Q2 2024. The operating loss also widened to $26.9 million from an operating income of $10.1 million, indicating deteriorating profitability.
• Content Impairment and Restructuring Costs [high — operational]: Ongoing restructuring activities have led to content impairments totaling $456.7 million since inception. The abandonment of certain programming with limited strategic purpose continues to impact financial results and cash flow.
• Increased Programming Amortization Expenses [medium — financial]: Programming amortization expenses rose to $162.5 million in Q2 2025 from $147.9 million in Q2 2024. This increase, coupled with declining revenues, puts pressure on gross margins and overall profitability.
• Declining Revenue Streams [high — market]: Total revenue decreased by 8.0% to $319.7 million, with both OTT revenue (-5.7%) and linear/other revenue (-12.8%) showing declines. This indicates challenges in subscriber acquisition/retention and advertising markets.
• High Debt Levels [medium — financial]: Despite a reduction from $699.9 million to $611.7 million, the company's debt remains substantial. The interest expense for Q2 2025 was $13.2 million, highlighting the ongoing cost of servicing this debt.
• Separation from Old Lionsgate [medium — operational]: The completion of the separation from Old Lionsgate on May 6, 2025, creates a standalone entity. While intended to unlock value, this transition period may introduce operational uncertainties and require significant management focus.

Industry Context

STARZ operates in the highly competitive media and entertainment industry, facing intense pressure from established players and emerging streaming services. The shift towards direct-to-consumer (DTC) models continues, but subscriber growth is slowing, and content costs remain high. Linear television viewership is declining, impacting traditional revenue streams, while the economics of streaming are challenged by market saturation and the need for continuous investment in original content.

Regulatory Implications

While no specific regulatory issues are highlighted in this filing, the media industry is subject to evolving regulations concerning content, data privacy, and antitrust. Changes in these areas could impact distribution agreements, advertising practices, and overall market access for STARZ.

What Investors Should Do

1. Monitor content strategy and ROI
2. Assess path to profitability
3. Evaluate debt management strategy
4. Analyze revenue diversification and growth

Key Dates

• 2025-05-06: Separation from Old Lionsgate completed — STARZ became a standalone public entity, marking a significant strategic shift and potential for independent growth or challenges.
• 2025-06-30: End of Second Quarter — Reporting period for the 10-Q, revealing a substantial net loss and declining revenues, highlighting current financial performance.

Glossary

OTT revenue

Revenue generated from Over-The-Top streaming services, delivered directly to consumers over the internet. (A primary revenue stream for STARZ, its decline indicates challenges in the competitive streaming landscape.)

Linear and other revenue

Revenue from traditional television channels, including carriage fees from distributors and advertising sales. (Represents the legacy business segment, its significant decline signals a shift away from traditional media consumption.)

Programming amortization

The systematic expensing of the cost of programming content over its useful life. (A major operating expense; an increase suggests higher investment in content or changes in amortization policies, impacting profitability.)

Content impairment charges

A write-down of the value of programming assets when their carrying amount exceeds their recoverable amount. (Indicates that previously invested content is no longer expected to generate sufficient future economic benefits, reflecting poor content strategy or market shifts.)

Restructuring and other

Costs associated with significant organizational changes, including severance, asset disposals, or other one-time events. (The shift from a credit to a charge indicates new or ongoing costs related to strategic realignments, impacting the bottom line.)

Accumulated deficit

The cumulative net losses of a company since its inception that have not been offset by net income. (A negative equity balance of $35.2 million indicates that the company has historically incurred more losses than profits.)

Year-Over-Year Comparison

Compared to the prior year's second quarter, STARZ ENTERTAINMENT CORP. has experienced a significant downturn. Total revenue has fallen by 8.0% to $319.7 million, driven by declines in both OTT (-5.7%) and linear (-12.8%) segments. This revenue contraction, coupled with increased programming amortization costs, has led to a substantial swing from a $4.2 million net income to a $42.5 million net loss. Operating income has also deteriorated, turning into an operating loss of $26.9 million. New risks related to ongoing restructuring and content impairments continue to weigh on the financial performance.

Key Financial Figures

• $625.1 million — illion outstanding per Term Loan A, was $625.1 million. See Note 4, Debt , for further details

Filing Documents

• starz-20250630.htm (10-Q) — 1308KB
• exhibit311certificationofc.htm (EX-31.1) — 9KB
• exhibit312certificationofc.htm (EX-31.2) — 9KB
• exhibit321certificationofc.htm (EX-32.1) — 5KB
• 0000929351-25-000103.txt ( ) — 7419KB
• starz-20250630.xsd (EX-101.SCH) — 60KB
• starz-20250630_cal.xml (EX-101.CAL) — 84KB
• starz-20250630_def.xml (EX-101.DEF) — 336KB
• starz-20250630_lab.xml (EX-101.LAB) — 669KB
• starz-20250630_pre.xml (EX-101.PRE) — 522KB
• starz-20250630_htm.xml (XML) — 977KB

Financial Information

Part I. Financial Information Item 1 .

Financial Statements (Unaudited)

Financial Statements (Unaudited) 4 Unaudited Condensed Consolidated Balance Sheets 4 Unaudited Condensed Consolidated Statements of Operations 5 Unaudited Condensed Consolidated Statements of Comprehensive (Loss) Income 6 Unaudited Condensed Consolidated Statements of Equity 7 Unaudited Condensed Consolidated Statements of Cash Flows 8 Notes to Unaudited Condensed Consolidated Financial Statements 9 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 30 Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 46 Item 4.

Controls and Procedures

Controls and Procedures 47

Other Information

Part II. Other Information 47 Item 1 .

Legal Proceedings

Legal Proceedings 47 Item 1A .

Risk Factors

Risk Factors 47 Item 2 . Unregistered Sales of Equity Securities and Use of Proceeds 47 Item 3 . Defaults Upon Senior Securities 47 Item 4 . Mine Safety Disclosures 47 Item 5 . Other Information 47 Item 6 . Exhibits 48

Signatures

Signatures 50 2 Table of Contents STARZ ENTERTAINMENT CORP.

FORWARD-LOOKING STATEMENTS

FORWARD-LOOKING STATEMENTS This Quarterly Report on Form 10-Q includes statements that are, or may be deemed to be, "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). These forward-looking statements can be identified by the use of forward-looking terminology, including the terms "believes," "estimates," "potential," "anticipates," "expects," "intends," "plans," "projects," "forecasts," "may," "will," "could," "would" or "should" or, in each case, their negative or other variations or comparable terminology. These forward-looking statements include all matters that are not historical facts. They appear in a number of places throughout this report and include statements regarding our intentions, beliefs or current expectations concerning, among other things, our results of operations, financial condition, liquidity, prospects, growth, strategies and the industry in which we operate. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. We believe that these risks and uncertainties include, but are not limited to, those discussed under Part I, Item 1A. Risk Factors found in our Annual Report on Form 10-K filed with the Securities and Exchange Commission (the "SEC") on June 26, 2025, (the "Form 10-K") as updated by any update to the risk factors found under Part II, Item 1A. "Risk Factors" herein. These risk factors should not be construed as exhaustive and should be read with our Form 10-K and the other cautionary statements and information in this report. We caution you that forward-looking statements made in this report or anywhere else are not guarantees of future performance and that our actual results of operations, financial condition and liquidity, and the development of the

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

FINANCIAL STATEMENTS

ITEM 1. FINANCIAL STATEMENTS UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS June 30, 2025 March 31, 2025 (Amounts in millions) ASSETS Cash and cash equivalents $ 51.6 $ 17.8 Accounts receivable, net 55.7 52.7 Due from LG Studios Business (Note 15) — 81.6 Prepaid expenses and other 15.9 18.4 Total current assets 123.2 170.5 Programming content, net 1,092.7 1,096.3 Property and equipment, net 50.4 48.6 Intangible assets, net 772.3 816.0 Other assets 53.0 41.8 Total assets $ 2,091.6 $ 2,173.2 LIABILITIES Accounts payable $ 78.1 $ 64.5 Programming related payables 378.1 101.8 Other accrued liabilities 63.6 64.5 Residuals 29.3 29.5 Programming related obligations 88.2 90.7 Deferred revenue 39.8 39.4 Due to LG Studios Business (Note 15) — 232.1 Total current liabilities 677.1 622.5 Debt 611.7 699.9 Other liabilities 82.2 75.9 Deferred tax liabilities 8.3 8.5 Total liabilities 1,379.3 1,406.8 Contingencies (Note 16) EQUITY Common stock, no par value, unlimited authorized, 16.7 shares issued (March 31, 2025 – nil ) 728.3 — Accumulated other comprehensive income 19.2 19.2 Parent net investment — 747.2 Accumulated deficit ( 35.2 ) — Total equity 712.3 766.4 Total liabilities and equity $ 2,091.6 $ 2,173.2 See accompanying notes. 4 Table of Contents STARZ ENTERTAINMENT CORP. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS Three Months Ended June 30, 2025 2024 (Amounts in millions) Revenue OTT revenue $ 221.1 $ 234.4 Linear and other revenue 98.6 113.2 Total revenue 319.7 347.6 Operating expenses: Programming amortization 162.5 147.9 Other operating 36.5 39.3 Advertising and marketing 63.4 82.7 General and administrative 29.1 26.6 Depreciation and amortization 48.7 41.6 Restructuring and other 6.4 ( 0.6 ) Total expenses 346.6 337.5 Operating (loss) income ( 26.9 ) 10.1 Interest expense ( 13.2 ) ( 10.8 ) Interest and other income — 0.8 Other expense ( 2.5 ) ( 1.7 ) Loss on extinguishment of debt — (

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View this 10-Q filing on SEC EDGAR