Starz recently announced a significant restructuring of its operations in Canada, transitioning from a joint venture with Bell Media to a content licensing agreement with the Canadian media giant. This change was revealed by Starz president and CEO Jeffrey Hirsch during the company’s latest quarterly earnings call.
Hirsch stated, “We are moving from a joint venture model to a stable, consistent content licensing agreement with our partner Bell Canada. Under this new simplified structure, the Starz-branded service will continue to be available in Canada, allowing Starz to generate international licensing revenue while Bell assumes full operational responsibility in the territory. This strategic shift aligns with our goal of owning our content and creating additional licensing revenue without the need to directly operate international services.”
As a result of this transition, Starz will no longer report Canadian subscribers starting from the next quarter. However, the company revealed that it ended the third quarter with 12.3 million U.S. OTT subscribers, marking an increase of 110,000 customers. The overall U.S. subscriber count for Starz stood at 17.5 million, with a slight decrease of 130,000. Including Canada, the total North American subscribers reached 19.2 million, showing an increase of 120,000.
Hirsch mentioned that this restructuring deal, which comes after Starz became a standalone entity following its spin-off from Lionsgate, is expected to have a positive impact on Adjusted OIBDA and free cash flow by the year 2026. Additionally, production has already commenced on Starz’s first-owned series “Fightland,” and Hirsch teased a co-commission partner that, along with the Bell Media agreement, will support the company in achieving 20% margins by the end of 2028.
The change in the relationship with Bell follows a recent carriage dispute in Canada, leading to the removal of the Starz-branded linear channel from a distributor’s programming packages. For the third quarter, Wall Street analysts had forecasted a loss of earnings per share (EPS) of $1.86 on $321 million in revenue for Starz. The company reported a loss per share of $3.15 on $321 million in revenue but reaffirmed its outlook of generating approximately $200 million of adjusted OIBDA by the end of the year.
In conclusion, Starz’s restructuring in Canada signifies a strategic shift in its operational model, aiming to capitalize on content licensing opportunities while enhancing revenue streams. With promising developments on the horizon, including new original series and growth projections, Starz is poised for continued success in the evolving media landscape.
(Pictured above: Starzâs âOutlander: Blood of My Blood.â)
