Starz Posts $189 Million Loss on Contract Termination Charge
Starz Entertainment swung to a $189.4 million net loss in the second quarter after absorbing a $147.2 million fee to cancel a film licensing contract.
Starz Entertainment (STRZ) reported a net loss of $189.4 million, or $11.27 a share, in the second quarter of 2026, more than four times the $42.5 million loss posted a year earlier. The widened loss followed a $151.2 million restructuring and other charge that included a newly disclosed $147.2 million fee to terminate a film licensing contract, a cost not present in any prior quarter shown.
The premium cable network operator's operating loss expanded to $175.5 million from $152.8 million in the first quarter of 2026 and from $26.9 million a year earlier, as the restructuring charge overwhelmed underlying improvement in the business. Total revenue fell 3.7% year over year to $307.9 million from $319.7 million, driven by a decline in linear and other revenue to $86.6 million from $98.6 million, while OTT revenue held roughly flat at $221.3 million. Sequentially, revenue was essentially unchanged from the first quarter's $306.9 million, a slower pace than the growth recorded off the fourth quarter of 2025's $322.8 million.
Beneath the charge, profitability metrics the company highlights kept improving. Adjusted OIBDA rose to $59.9 million, up 79% from $33.4 million a year earlier and the fourth consecutive quarterly increase, building from $21.8 million in the third quarter of 2025 through $55.5 million and $58.0 million in the two quarters that followed. The Adjusted OIBDA leverage ratio improved to 2.9x on a trailing-twelve-month basis from 3.1x in the first quarter, though it remained above the company's 2.7x year-end target.
Cash flow moved the opposite direction. Net cash from operating activities swung to a use of $28.2 million, reversing $73.2 million provided in the first quarter and $65.4 million a year earlier, while unlevered free cash flow turned negative at $14.7 million from a positive $80.7 million the prior quarter. The swing was due to timing of programming spend rather than a change in trend, and cash paid for programming content jumped to $181.6 million from $113.4 million, the highest of the five quarters disclosed. Cash on hand fell to $59.6 million from $102.1 million at the end of the first quarter, while net debt rose to $565.5 million from $523.0 million even as total debt held flat at $625.1 million.
Total equity dropped to $295.9 million at June 30 from $646.0 million at December 31, 2025, as the accumulated deficit widened to $462.8 million from $108.5 million over the first half of the year. General and administrative expense rose 37% to $40.0 million and depreciation and amortization climbed 38% to $67.3 million, both year over year. Other liabilities on the balance sheet more than doubled to $170.0 million from $72.7 million, a new contingent liability item not previously disclosed at that scale.
Starz raised its full-year 2026 Adjusted OIBDA growth outlook to mid-single digits from low-single digits and narrowed its unlevered free cash flow guidance to the mid-to-upper end of its previously stated $80 million to $120 million range. It reiterated its OTT revenue growth target and 2.7x year-end leverage goal, both unchanged from the prior quarter's guide, and again pointed to the second half of 2027 for reaching a 20% Adjusted OIBDA margin, a target the company had already moved up by a year starting with its first-quarter release.
The company dropped subscriber-count disclosures from its release for a second straight quarter, after highlighting domestic OTT subscribers reaching an all-time high of 12.7 million, up 7.6% year over year, as of December 31, 2025. Starz adopted a shareholder rights plan in March 2026 triggered at 17.5% ownership, a defense not disclosed in prior-quarter releases.