Starz Hits 9.2 Million Domestic Streaming Subscribers

Jon Feltheimer
Phillip Faraone/Getty Images

Lionsgate reported quarterly revenue of $745 million, well down from a year-earlier $983.5 million amid the pandemic.

Lionsgate on Thursday swung to a second-quarter loss on lower overall revenues and continuing growth at Starz.

The premium cable and streaming channel added a record 1.8 million streaming subscribers in the U.S. during the latest quarter to get to 9.2 million streaming customers domestically. The studio added 2.3 million Starz streaming customers in international markets, including for STARZPLAY Arabia the Pantaya Spanish language platform, to get to 13.7 million subscribers overall.

Lionsgate CEO Jon Feltheimer on an analyst call put the record subscriber growth at Starz as it continues a pivot to the streaming arena down to new TV show launches like Ghost, the first Power spin-off, the second season launch of Spanish Princess and P-Valley. Starz's international business also gained from launches in the UK, Brazil and other key territories.

"Our best of global SVOD content strategy is resonating with consumers while our partnerships with top global streaming platforms and local distributors are creating exciting new bundling opportunities," Feltheimer told analysts. He forecast Starz would reach the top end of a forecast of 13 million to 15 million global streaming subscribers by the end of fiscal 2021.

"We expect OTT (over-the-top) revenues and profits to soon follow subscribers across this milestone as we continue to transition from a primarily wholesale licensing model to a more global, data-driven, direct-to-consumer world," Feltheimer said of the Starz streaming strategy.

Stock in Lionsgate jumped by 55 cents, or nearly 8 percent, to $7.59 in after-hours market trading on news of the record streaming customer growth at Starz.

"We're pleased to report another strong quarter, including record over-the-top subscriber growth at Starz both domestically and internationally. Together with the resumption of film and television production and another great revenue performance from our library, it added up to a quarter that reflected strong financial results, acceleration of our key non-financial metrics, and affirmation of the business plan we created four years ago with the acquisition of Starz and our pivot to the streaming world," Feltheimer said in a statement ahead of the analyst call.

Lionsgate during the latest quarter reported a net loss attributable to shareholders of $18.4 million, against a year-earlier $1.8 million in earnings for the three months ending Sept. 30. The indie studio posted a per-share loss of 8 cents, against a profit of 1 cents per share in the year-ago period. The adjusted earning per share of 33 cents beat an analyst estimate for 17 cents.

Overall revenues came to $745 million, well down from a year-earlier $983.5 million amid the pandemic. The revenue line also missed on an analyst estimate of $760.4 million. Media networks revenue, which is mostly Starz, came to $388.3 million during the second quarter, up 3.8 percent from a year-earlier $374 million, which was driven by domestic streaming subscriber growth.

Motion picture group revenue fell sharply to $257.6 million, against a year-earlier $405.8 million, amid movie theater closings amid the COVID-19 crisis. The loss of theatrical revenues was offset by titles being diverted to premium video-on-demand and digital home entertainment platforms.

Joe Drake, CEO of the Motion Picture Group, discussed cuts of 15 percent of an overall film group workforce of around 450 employees unveiled earlier in the day, as he argued the streamlining was due in part to the pandemic, but came about more amid a shift to streaming viewership.

"The new windows that people are talking about are only accelerating and that has created real distribution opportunities for us... The windows will continue to evolve and we just see a ton of opportunity moving forward in our business," Drake told analysts.  He also revealed the Hollywood studio would be opportunistic in whether it released movies theatrically, via premium video-on-demand or on streaming platforms.

"What we're seeing is that monetizing in these new windows, whether it is leading with theatrical, whether its theatrical and PVOD combined or whether you go direct to consumer or other ways of exploiting, the values are there for us to go and monetize," Drake argued.

TV production revenues were $197.2 million, compared to a year-ago $274 million, due to the timing of production schedules and episode deliveries during the pandemic.

Feltheimer on the analyst call revealed Lionsgate's film and TV divisions had returned to production amid the pandemic. On the TV side, the studios has a dozen scripted series and over 20 unscripted shows back before the cameras, and the feature film business has greenlit eight films in the past six months to meet pent-up demand for content by global distributors post-pandemic.

"One has already wrapped, four more are currently shooting and three others are slated to begin production early next year," Feltheimer reported.