Starz First-Quarter Earnings Exceed Expectations, Subscribers Rise

The premium TV company, led by Chris Albrecht, set its latest record for Starz-branded subscribers and ended March with 57.5 million total subscriptions.

Starz on Thursday reported improved first-quarter earnings and subscriber figures.

The premium TV company, led by CEO Chris Albrecht, reported earnings of $86.1 million, or $84.6 million attributable to stockholders, compared with $66.8 million in the year-ago period. Earnings per share reached 79 cents per share, up from 56 cents last year. Wall Street had on average forecast earnings of $63.1 million, or 61 cents per share. Revenue rose 7 percent to $450.7 million.

In the first quarter, total company subscriptions reached 57.5 million, compared with 57.3 million as of the end of 2014 and 56.3 million as of the end of the first quarter of 2014.

The company said it added 1.8 million Starz subscribers during the latest quarter to end it with a total of 23.7 million, its latest record  and up from 23.3 million at the end of 2014. It had ended the first quarter of 2014 with 21.9 million.

The company lost some Encore subscribers to end March with a total of 33.8 million, compared with 34.0 million at the end of 2014. The company had ended the first quarter of 2014 with 34.4 million.

Starz reiterated that it is the "second most widely distributed flagship premium pay-TV network" in the U.S. behind HBO.

"Revenue from Starz Networks increased $10.0 million, or 3 percent for the three months ended March 31, 2015 as compared to the corresponding prior-year period," the company said. "The increase in revenue is a result of a $15.3 million increase due to higher effective rates, partially offset by a $5.3 million decrease due to lower average subscriptions. Consignment subscriptions were negatively impacted at certain distributors by reduced promotional activity."

During a conference call with analysts, Albrecht took shots at Showtime and HBO, a couple of Starz' rivals that are getting into over-the-top streaming and thus, in his view, devaluing the product they sell to cable providers.

"If I were an MVPD, I'd say, 'Make Starz the house brand.' They make the most money with us," he said. "We're investing in our product and we are completely aligned with them."

The CEO also lamented the demise of the Comcast-Time Warner Cable deal, given he was one of the few CEOs in the industry to have publicly supported the proposed merger.

"Part of why we thought that was a good deal (is because) we would see the penetration of Starz increase in key markets like Los Angeles," he said.

He added that he didn't foresee any problems for Starz should AT&T's proposed acquisition of DirecTV go through.

Albrecht also lauded his company's quarterly results. "We delivered strong year-over-year revenue and earnings growth in the first quarter," he said. "Our solid financial profile highlights the success of our strategic growth plan to develop, produce and monetize Starz Original series globally."

He added: "Our programming slate is the most robust it's ever been and we are on track to have an expected 75-80 episodes of new originals this year. The reception we are seeing for Starz Original series bodes very well for our efforts to fortify distribution relationships and to build Starz's presence overseas, as underscored by the launch of the Starz Play Arabia over-the-top service. We are excited about the prospects for our business in 2015 and beyond."

Twitter: @georgszalai