Starz Adds Record 1.2 Million OTT Subs

Lionsgate-owned Starz saw its domestic OTT service add a record 1.2 million subscribers in the second quarter (ended Sept. 30), to end the period with 5.6 million subs, its best sequential growth quarter ever. The service is targeting 6 million subs by the end of the fiscal year.

Starz ended the quarter with 27 million total global pay-tv subscribers, up 1.8 million from the prior year quarter, and 24.7 million total domestic subs — down about 400,000 subs from the prior-year quarter.

The pay-TV tally is under threat from ongoing carriage issues with Comcast Cable, which accounts for about a third of Starz’ subs. Comcast has threatened to replace Starz with Epix unless it can negotiate more favorable terms.

Regardless, CEO Jon Feltheimer said Starz Play (available outside the U.S. only) remains on target to reach 4 million international subscribers in fiscal 2020 — due in part to now being operational in five countries.

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“Even as our industry is undergoing the most disruptive secular change in its history, all of our core businesses have staked out strong, sustainable and unique positions within the ecosystem and are performing very well,” Feltheimer said in a statement.

The media networks segment revenue was relatively flat from the prior year quarter at $374 million, while segment profit declined 14.8% to $104.6 million driven by investment in the expansion of subscription streaming serviced Starz Play International. The service added about 200,000 subs in the quarter.

Motion picture segment revenue increased 7.1% to $405.8 million and segment profit increased nearly 300% to $51 million from the prior-year quarter reflecting the strong theatrical performances of Scary Stories to Tell in the Dark, Angel Has Fallen and Rambo: Last Blood, as well as the continued outsized ancillary performance of John Wick: Chapter 3 — Parabellum.

Television production segment revenue of $274 million was up 80.1% from the prior-year quarter, while segment profit increased 34% to $12.6 million due to an increase in revenue from television episodes delivered.

Lionsgate Ups Jeffrey Hirsch to CEO of Starz

Lionsgate Sept. 26 promoted Jeffrey Hirsch to CEO and president of Starz, replacing former CEO Chris Albrecht, who left the premium pay-TV/SVOD service in February

As CEO, Hirsch will shape the overall business and programming strategy for Starz and oversee the continued evolution and expansion of the brand’s over-the-top video platform around the world.

Hirsch joined Starz four years ago, was promoted to COO in 2016 and has been running the network for nearly a year.

Under his leadership, Starz increased its overall domestic subscriber base from 23.5 million to 24.7 million last year and continued the rapid growth of of the brand’s domestic OTT businesses.

Starz has more than 4.4 million domestic OTT subscribers with successful launches during the last year on Apple, Hulu, Roku, YouTube TV and an array of other platforms.

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Lionsgate operates separate SVOD service Starz Play internationally.

Hirsch shepherded the launch of the Starz app in the U.S. and orchestrated Starz Play’s expansion into nearly 50 countries in Europe, Latin America, the Middle East and North Africa as well as Canada.

Starz plans to continue its rapid international growth and, as previously announced, expects to have as many as 15 million to 20 million international subs by 2025.

“Jeff continues to lead Starz’s transformation into one of the world’s premier subscription platforms,” Lionsgate CEO Jon Feltheimer said in a statement. “He has a clear strategic vision, great understanding of where our business is headed and strong relationships that will all contribute to Starz’s continued strong growth and evolution.”

Hirsch recently announced that STARZ delivers the highest composition of female viewership in premium cable, and the network continues to build on its success with a focused strategy of developing and producing premium programming that appeals to women and other traditionally under-served African-American, Latinx and LGBTQ audiences.

Starz original programs “Power” has more than 10 million multi-platform views per episode and “Outlander,” a perennial ratings favorite among women.

Hirsch recently greenlit three new series written and/or executive produced by women, including a reimagined “Dangerous Liaisons,” the third season of “The Girlfriend Experience” and the dark comedy “Shining Vale.”

The network is also preparing the launch of “Power Book II: Ghost,” starring Mary J. Blige in a lead role, the first of several “Power”-inspired series that include a prequel shepherded by “Power” creator and showrunner Courtney A. Kempand executive producer Curtis “50 Cent” Jackson as Starz continues to expand the “Power” Universe into a year-round viewing experience.

Hirsch joined the company in 2015 as president of global marketing and product development. Since Lionsgate’s acquisition of Starz in 2016, Hirsch has played a lead role in integrating Starz into the Lionsgate family and exploring opportunities for the two companies’ combined suite of OTT offerings.

Prior to joining Starz, Hirsch served as EVP and chief marketing officer, residential services at the former Time Warner Cable.

 

 

Lionsgate Building Production Studio in New York

Lionsgate, together with Great Point Capital Management, a media-focused investment fund, Sept. 5 announced it has signed a letter of intent to build a major new production facility in Yonkers, New York, with Lionsgate becoming a long-term anchor tenant and investor in the studio complex.

As anchor tenant, Lionsgate will have naming rights to the studio.

Construction on the Yonkers site will start this November and the facility will be up and running in late autumn 2020.

The $100+ million entertainment complex will include three 20,000-square-feet and two 10,000-square-feet stages, a fully operational back lot and the opportunity to create a location-based entertainment property similar to what Lionsgate has already established in China, the Middle East and elsewhere around the world.

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A key investment partner and project developer is National Resources. The company has operated in the New York area for 30 years and has tallied over $1.5 billion of redevelopment.

National Resources has a wide range of experience in design and construction, with projects including automotive dealerships, warehouse facilities, municipal facilities and retail stores. National Resources will be responsible for all phases of design and construction of the studio complex.

The studio complex will be located less than 30 minutes from Manhattan on the Hudson River in downtown Yonkers. It is situated along the newly created Saw Mill River Plaza and next to the new Yonkers train station.

“We’re pleased to partner with the Great Point and National Resources teams on a modern film and television production complex that will provide a great home for many of our content creation initiatives,” Lionsgate CEO Jon Feltheimer said in a statement.

Joseph Cotter, president of National Resources, said the city of Yonkers has been very supportive of the studio facility. The growth and revitalization of Yonkers as well as its proximity to New York City make it an ideal location for a film studio.

“This is a game changer for the City of Yonkers and is a testament to the ongoing revitalization of our waterfront,” said Yonkers Mayor, Mike Spano. “Yonkers already hosts dozens of on-location shoots every year with film days tripling over the last five years, so building a permanent sound stage here makes perfect sense.”

Adviser to the fund is London-based Great Point Media Group, a media and entertainment company owned by Jim Reeve and Robert Halmi (who will also be an investor in the new studios).

It has provided investment and arranged financing for more than 50 production companies, with clients including Lionsgate, Netflix, Amazon, Hulu, Google, Sky, BBC, ITV, Universal, AMC, Hallmark, Sony and Paramount.

Starz Adds 400,000 Q1 Members, Tops 4.4 Million Subs

Starz added 400,000 domestic streaming video subscribers in the first quarter, ended June 30, to finish the period with 4.4 million members since launching in 2012.

It was the $9 monthly Lionsgate-owned OTT video unit’s best-performing quarter in terms of sub growth.

Total Starz sub growth, including pay-TV channels and StarzPlay internationally, increased by 2.6 million to 26.5 million, which includes 24.4 million domestic subs.

As a result of the sub growth, Lionsgate’s Media Networks division increased revenue 4.9% to $372.4 million.

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Segment profit for Starz Networks increased 3.4% to $103.7 million, which was offset by ongoing content investment in StarzPlay.

Indeed, overall Media Networks profit declined to $60.6 million from $88.5 million in the previous-year period due to content costs.

On the fiscal call, Starz COO Jeffrey Hirsch defended the SVOD service’s subscription price as Disney readies less expensive $6.99 Disney+ service on Nov. 12.

“If you look at the history of Starz, we’ve always been a premium, add-on television,” Hirsch said.

Lionsgate’s global expansion of Starz has resulted in the development of an additional 20 episodic programming projects, according to Kevin Beggs, chairman of the media company’s TV group.

Beggs dismissed Netflix’s headline-grabbing mega production deal with “Game of Thrones” creators David Benioff and Dan Weiss, contending Lionsgate doesn’t chase those kinds of deals.

“For writers and directors who are overperforming, there’s always been an unbelievable upside the way we structure our deals,” Beggs said, alluding to Lionsgate’s practice affording content creators with multiple compensation options, including backend unavailable at Netflix’s business model.

Lionsgate Posts Quarterly, Fiscal-Year 2019 Losses

There might be a reason Lionsgate reportedly considered selling Starz to CBS for billions of dollars. The studio/distributor had a rough fiscal fourth quarter (ended March 31) and operating year 2019.

The Santa Monica, Calif.-based company posted a quarterly loss of $159.1 million compared to net income of $89.6 million during the previous-year period. Revenue fell nearly 13% to $913.7 million, compared with more than $1 billion in the year-ago period.

For the fiscal year, Lionsgate recorded a net loss of $284.2 million, compared with net income of $468.1 million in fiscal 2018.

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The motion picture segment saw revenue decrease 20% to $1.46 billion in the fiscal year, due primarily to a smaller film slate in fiscal 2018. Segment profit decreased 28% to $129 million.

The studio’s Robin Hood reboot, starring Jamie Foxx and Ben Mendelsohn, among others, misfired at the box office, generating just $30.8 million on a reported $100 million production budget. The title generated nearly $54 million internationally.

A more detailed look at home entertainment results is forthcoming pending release of the company’s 10K filing.

Regardless, CEO Jon Feltheimer tried to put a positive spin on the results.

“We’ve completed a very active and productive fiscal 2019 in which we set in place all the elements for strong growth and continued value creation in the year ahead,” Feltheimer said in a statement.

Meanwhile, Starz Networks — with 24.5 million pay-TV subscribers — generated operating profit of $108.6 million on revenue of $355 million. That compared to operating profit $114.7 million and revenue of $350.5 million in the previous-year period.

For the fiscal year, operating income reached $488 million on revenue of $1.44 billion. That compared to operating income of $468 million on revenue of $1.4 billion in 2018.

Starz’ much-hyped over-the-top streaming video service narrowed its operating loss to $1.8 million on revenue of $6 million. That compared to an operating loss of $7.7 million on revenue of $2.9 million in the previous-year period.

For the fiscal year, Stars OTT narrowed operating loss to $11.3 million from $38.9 million. Revenue increased to $18.1 million from $7.1 million in 2018.

“We’ve … refocused on extracting maximum value from our franchise properties and are capitalizing on an extraordinary opportunity to continue Starz’s global expansion and cement its stature as one of the leading international pure play subscription video-on-demand services,” Feltheimer said.

Lionsgate Q3 Home Entertainment Revenue Falls, Starz CEO Chris Albrecht Departs

Lionsgate Feb. 7 reported third-quarter (ended Dec. 31, 2018) home entertainment revenue from movies of $149.7 million, down 31% from revenue of $189 million during the previous-year period. Through nine months of the fiscal year, movie revenue fell 22% to $462 million compared to $588.6 million last year.

Sales of DVD and Blu-ray Disc movies fell 35% to $68 million from $104 million, while digital sales dipped about 4% to $81.7 million from $85 million.

Through nine months, packaged media movie revenue is down 33% to $209 million from $311.5 million last year. Digital sales are down less 9% at $253 million from $277.1 million.

Sales of TV shows on disc reached $2.5 million, compared to $4.1 million during the previous-year period. Digital sales reached $10.9 million, down 58% from $25.7 million last year.

Motion Picture segment revenue reached $362.6 million. Segment profit decreased 19.9% to $43.5 million, reflecting underperformance of certain titles in fiscal 2019 compared to the outperformance of Wonder in the prior year quarter.

Media Networks segment revenue increased to $366.8 million due to strong OTT (i.e. Starz) subscriber growth. Segment profit increased 9.6% to $134.1 million from the prior-year quarter. Overall domestic subscribers were sequentially consistent in the quarter at 25.1 million and up 1.1 million year over year.

Starz had a strong revenue and subscriber quarter, ending the quarter with 25.1 million overall domestic subscribers, which was consistent sequentially and up 1.1 million subscribers from the prior year quarter.  Starz achieved strong over-the-top (OTT) subscriber growth for the sequential quarter as well as year-over-year.

“We’re pleased to report a strong quarter with significant free cash flow and continued revenue and subscriber growth at Starz,” CEO Jon Feltheimer said in a statement.  “As we refill our feature film and television pipelines at a robust pace and take our integration of Lionsgate and Starz to the next level, all signs are pointing to strong growth in the year ahead.”

Feltheimer gave a shoutout to departing Starz CEO Chris Albrecht, who helped transition the pay-TV and OTT platform following Lionsgate’s $4.4 billion acquisition in December 2016.

“[Chris transformed] Starz from a legacy media network to a forward-looking streaming platform,” Feltheimer said on the fiscal call.  “He worked closely with me to position Starz for the next phase of its growth and he leaves behind a strong programming slate and a talented leadership team. I’m confident we will maintain our momentum without missing a beat.”

Lionsgate Eyes Starz OTT Sub Growth — Through Amazon, Hulu, Others

Lionsgate, like a lot of media companies, is staking much of its growth on over-the-top video — notably subsidiary Starz’ branded streaming video app.

The $8.99 service, which offers original programming, Lionsgate movies and third-party (i.e. Sony Pictures) content, has about 3 million subscribers since its April 2016 launch.

Much of that growth has come from Amazon Channels, the ecommerce giant’s platform offering third-party OTT video services directly to Prime members.

“They are a very strong partner for us not just in what we’re doing now but in things that we’re talking about doing in the future [i.e. outside the U.S.],” Lionsgate CEO Jon Feltheimer said on the Nov. 8 fiscal call.

“It’s much more efficient and economical for us to launch with these big partners. It’s a lot quicker to market piggybacking on the customer relationships that they’ve already have,” he said.

Feltheimer wants to replicate that sub growth through third-party streaming services. Late last month, Starz became a premium add-on to Hulu and Hulu With Live TV.

The two companies previously partnered making Hulu the exclusive SVOD distributor for Starz’ four-year-old original drama, “Power”.

“We look at their business and the Amazon business as complementary,” Feltheimer said.

The executive said Hulu has done well with other OTT video brand partnerships, which include HBO Now, Showtime OTT and Cinemax.

“We look forward to a good partnership with them,” he said. “The economics are very good for Starz in these OTT video wholesale relationships. And we’re hopeful that there’ll be even more partners announced domestically and globally.”

Lionsgate is banking Hulu and future OTT partnerships will introduce markets new to Starz distribution and programming.

“Whether or not we augment that with a direct-to-consumer business is something that we’ll always take a look at, but right now this global partnership strategy is opportunistic,” Feltheimer said.

“Where we think there are available customers, places where we think there’s a real demand for not just the shows that we have, but for our subscription service in general, thousands of movies, great tech, and great price.”

Starz CEO Hints at 8 Million OTT Subs as Service Expands into France, Italy, Spain

In deference to the burgeoning over-the-top video ecosystem, Lionsgate CEO Jon Feltheimer spent much of the Aug. 9 fiscal call plugging subsidiary Starz and its branded $8.99 SVOD platform.

Feltheimer said Starz, which Lionsgate acquired in 2016 for $4.4 billion, is “well-capitalized” to take advantage of the growing online TV market (i.e. DirecTV Now, YouTube TV, Sling TV). The channel is slated to bow on Hulu Live TV in October.

“We’re bullish about overall [including pay-TV] subscriber growth for the rest of the year,” said Feltheimer.

On the call, Starz CEO Chris Albrecht suggested the OTT platform’s sub base could rival the 8 million associated with HBO Now – with the majority of Starz sub growth in the United Kingdom and Germany generated through Amazon Channels and, separately, as a result of a Hulu partnership in the United States.

“If you took our Amazon business and added in a potentially-like Hulu business, we’d be right up there [in subscribers],” Albrecht said. “We have a strong wholesale relationship … great price point, and we think it’s a really good product.”

Starz officially disclosed 2 million OTT subscribers in late 2017.

Starz (branded Starz Play outside the U.S.) features Lionsgate catalog movie and TV programming as well original series “Power,” “Outlander,” “American Gods” and “The Spanish Princess,” among others.

Starz co-owns Starz Play Arabia — the largest OTT video service in the Middle East, with Starz Play launches planned for France, Italy and Spain.

Responding to an analyst’s question about Lionsgate’s willingness to up Starz content spending, Feltheimer said the answer is “yes”.

“The plan is working as we spend more, as we market more effectively, we are getting excellent subscriber [growth] trajectories,” he said.

 

Lionsgate Motion Picture Segment Q1 Revenue Declines Due to Lack of High-Profile Home Entertainment Releases

Lionsgate Aug. 9 said its motion picture segment, which includes home entertainment, reported a 23% decline in first-quarter (ended June 30) revenue to $365.3 million from $472.4 million in the previous-year period.

Operating income fell 41% to $51.6 million compared to operating income of $86.9 million last year.

Specifically, motion picture packaged media revenue topped $76.5 million, down 43% from $132.5 million during the previous-year period. Digital media revenue fell 15% to $86.2 million from $101.5 million.

Packaged media sales of TV content topped $1.8 million, up 64% from $1.1 million last year. Digital sales plummeted 60% to $16.1 million from $41.6 million.

The studio attributed the decline in part to year-over-year home entertainment revenue from John Wick: Chapter 2 and the international revenue from Oscar winner La La Land.

Indeed, John Wick: Chapter Two generated $29.3 million on sales of 1.7 million combined DVD/Blu-ray Disc units in 2017, according to The-Numbers.com.

Media networks segment revenue increased by 3% to $354.9 million due to solid OTT revenue growth. Segment profits were essentially flat from the prior year quarter due to costs associated with Starz’s international rollout and a moderate increase in domestic marketing spend. Domestic subscribers increased 300,000 sequentially in the quarter, reaching 23.8 million, with growth in both traditional MVPD and OTT subscribers.

Television production segment revenue increased by 7% to $279.4 million in the quarter as gains in domestic license fees and international revenue offset the comparison to a prior year quarter that included a digital media licensing agreement for the Starz original series Power. Segment profit decreased by 64% to $15.6 million in the fiscal quarter.

“Our global content machine is operating at full throttle, and we continue to invest in a programming and international rollout strategy at Starz that is working,” CEO Jon Feltheimer said in a statement. “Our initiatives in the quarter continued to strengthen Lionsgate’s stature as a unique and essential part of the media ecosystem.”

Starz Bowing on YouTube TV, Hulu

Seeking to significantly upgrade the Starz brand globally, corporate parent Lionsgate has licensed the premium channel’s app to YouTube TV and Hulu.

Speaking on the May 24 fiscal call, Jon Feltheimer, CEO of Lionsgate, said the distribution agreements were part of a global rollout of the Starz app across 15 territories over the next three years.

As previously reported, Lionsgate launched the Starz Play channel in the United Kingdom and Germany via Amazon Channels, the ecommerce behemoth’s platform affording Prime members access to third-party over-the-top video services.

The app offers more than 1,000 hours of original programming, including Lionsgate created series “The Royals,” “Casual” and “Boss,” as well as feature films ranging from the “Saw” and “Hunger Games” franchises.

“All of this activity comes on top of [the] Starz launch in Canada and the continued growth of our Starz Play venture in the Middle East and North Africa,” Feltheimer said. “In Canada, where we recently announced our partnership with Bell Media, Starz programming is already available to consumers with full over-the-top and linear rollout slated for early next year.”

Starz availability on YouTube TV, Google’s standalone online TV service, begins next month, followed by similar launch on Hulu Live with TV in October.

“We expect meaningful subscriber increases from all of these new deals,” Feltheimer said.

Indeed, Starz pay-TV base declined by 500,000 subscribers, finishing the quarter with 23.5 million subs.

More importantly, a decline in licensed Starz programming to third parties resulted in an 8% drop in Media Networks segment operating income to $115 million compared to the previous-year period. Revenue dipped 1% to $366 million.

For Chris Albrecht, president of Starz, OTT video is the brand’s future.

“The OTT business is clearly the business that we see there being real growth potential in and the economics are good for us there, and we’re very bullish as we expand our global reach,” he said.

The news helped up Lionsgate shares nearly 5% May 25 in early trading.