Starz reported mixed first-quarter 2026 earnings on Thursday and announced it has ended its Pay-2 output agreement with Universal [1, 2].
This strategic shift comes as the media company attempts to stabilize its financial health and reduce content costs following its 2025 spinoff from Lionsgate. By exiting high-cost licensing deals, Starz aims to improve its bottom line while operating as an independent entity.
Jeff Hirsch, CEO of Starz, said the company is "structurally stronger" than it was when the split from Lionsgate occurred [1]. Despite the optimism, financial reports for the first quarter varied. Some reports described the results as mixed, while others noted a widened loss for the company [1, 2].
To address these challenges, Hirsch is focusing on the company's spending habits. He said that right-sizing the content cost structure of the business has been paramount to reaching the company's stated goal of a 20% operating margin [3].
"Today, we are announcing that we have exited our Pay 2 agreement with Universal," Hirsch said [1]. The move is part of a broader effort to revisit how the company acquires and pays for its library of movies, and television shows.
Market reaction to the earnings report and the cost-cutting measures was positive in the short term. Starz stock rose more than three percent in late trading following the release of the quarterly results [1].
“"We are structurally stronger than when we split from Lionsgate."”
The exit from the Universal deal signals a pivot away from expensive, broad-output licensing in favor of a leaner content strategy. By targeting a specific 20% operating margin, Starz is prioritizing profitability and fiscal discipline over aggressive library expansion to prove its viability as a standalone company after the Lionsgate separation.
