Starz’s direct-to-consumer service, which launched in April priced at $8.99 per month, is nearing 1 million subscribers, thanks in part to Amazon.
“The third season of ‘Power’ established a Starz record for viewership, surpassing 7.3 million multiplatform viewers per episode, and helping nearly drive OTT subscriptions close to the 1 million mark,” said Starz CEO Chris Albrecht in a statement. “The strong performance of our Amazon and Starz app initiatives complements the Starz Networks business with core distributors.”
Albrecht’s comments align with what he said in June during the Gabelli Movie and Entertainment Conference. There he described Amazon Video's Streaming Partners Program as “accretive” to Starz's OTT business and talked about how Starz’s digital affiliate deal with Amazon, complete with rate card, differs from the revenue share model used in Starz’s agreements with Apple and Google.
For its traditional linear product, Starz said it increased subscriptions by 1.2 million year-over-year and added 300,000 since June 30, bringing its subscriber total to 24.5 million. The subscriber count for the combined Starz and Starz Encore now sits at 56 million.
Starz’s subscriber uptick comes as the company nudges closer to merging with Lionsgate. In June, Lionsgate announced it would pay $4.4 billion in a cash and stock deal for the premium programmer.
“The planned merger with Lionsgate continues to progress, and we are readying for the content opportunities that will come with being a robust combined company,” said Albrecht.
But in the meantime, merger related costs helped increase Starz’s operating loss from $3.4 million to $3.9 million.
In all, Starz’s consolidated revenue did increase by 1 percent to $407.8 million but operating income fell by 27 percent. While Starz Networks revenue increased 6 percent to $348.6 million powered by rate increases, operating income for the division decreased 21 percent to $80.4 million primarily due to an increase in programming and advertising costs associated with original programming. Starz paid $27.7 million more ($76.3 million total) during the quarter to produce more original series.
At Starz Distribution, revenue fell 7 percent to $60.9 million and operating income decreased $3.4 million to a loss of $2.5 million. Starz attributed the shortfall to fewer significant new release titles from The Weinstein Company.