Starz Fourth-Quarter Earnings, Subscribers Rise

Chris Albrecht - PR portrait - 2011

The premium TV company, led by Chris Albrecht, ended 2014 with 57.3 million total subscriptions.

Premium TV company Starz, in which Lionsgate recently agreed to take a stake, on Wednesday reported improved fourth-quarter earnings and subscriber figures.

The company, led by CEO Chris Albrecht, posted quarterly earnings of $77.4 million, compared with $72.5 million, or $80 million in earnings attributable to stockholders, compared with $73.3 million in the year-ago period. The results exceeded Wall Street expectations.

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Operating profit rose from $103.4 million to $136.1 million, an increase of 31 percent. Starz also said that operating income before depreciation and amortization (OIBDA) rose 27 percent to $148.3 million. Revenue of $425.6 million was up 3 percent from $414.7 million in the year-ago period.

In the fourth quarter, Starz subscriptions rose to 23.3 million, a new high, from 22.5 million as of the end of September and 22.2 million as of the end of the fourth quarter of 2013.

That brought total company subscriptions to 57.3 million at the end of 2014, compared with 56.2 million at the end of September and 57.1 million at the end of 2013.

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The Encore services accounted for 34 million subscriptions at the end of 2013, compared with 33.7 million at the end of September and 34.9 million at the end of 2013.

"Our fourth-quarter results capped off a strong 2014, as we delivered solid increases in revenue, adjusted OIBDA and a new high subscriber count at Starz," said Albrecht. "The 2014 performance at Starz validates the strategy undertaken to transform the company from primarily a movie-based provider to a true gold standard premium entertainment provider."

He added: "We have tremendous momentum entering 2015 with our strongest and most diverse slate of original programming and opportunities to expand our reach globally. We believe Starz is well positioned for continued success."

Starz's slate of originals for 2015 is expected to consist of 70 episodes of scripted series, the company said. The second season of Black Sails is underway, and Ash vs Evil Dead will launch in late 2015, among others.

ISI Media analyst David Joyce, in a first reaction said: "Investors will appreciate that the Starz original programming strategy continues to drive up subscriptions and rate, while tempered programming spending in the quarter led to an [operating cash flow] beat." The headline of his note to investors was "The Strategy's Working."

Vasily Karasyov, analyst at Sterne Agee, said: "We expect Starz shares to be strong today following fourth-quarter results well above consensus due to lower programming costs and higher-than-expected margin at the networks. Subscriber trends were also healthy."