STARZ ENTERTAINMENT CORP /CN/ 10-Q

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Currency and Interest Rate Risk Management Market risks relating to our operations result primarily from changes in interest rates and changes in foreign currency exchange rates. Our exposure to interest rate risk results from the financial debt instruments that arise from transactions entered into during the normal course of business. Our exposure to foreign currency exchange risk is related to transactions in currencies other than the U.S. Dollar. As part of our overall risk management program, we evaluate and manage our exposure to changes in interest rates and currency exchange risks on an ongoing basis. Hedges and derivative financial instruments may be used in the future to manage our interest rate exposure. We only enter financial derivative contracts- to hedge a specific financial risk. Currency Rate Risk. The Company entered into forward foreign exchange contracts during the quarter ended June 30, 2025 to hedge our foreign currency exposures on future programming production costs denominated in British Pounds. These contracts are entered into with major financial institutions as counterparties. Refer to Note 13, Derivative Instruments and Hedging Activities , for further details. Interest Rate Risk. The Company entered into interest rate swap contracts during the quarter ended June 30, 2025 to mitigate the impact of interest rate changes on earnings and cash flows. Refer to Note 13, Derivative Instruments and Hedging Activities , for further details. Certain of our borrowings, primarily borrowings under our credit facilities, are at variable rates of interest and expose us to interest rate risk. If interest rates increase, our debt service obligations on this variable rate indebtedness would increase even though the amount borrowed remained the same, and our net income would decrease. The Company’s objective is to mitigate the impact of interest rate changes on earnings and cash flows and has entered into $150.0 million worth of pay-fixed interest rate swaps to facilitate its interest rate risk management activities. Pay-fixed swaps effectively convert floating-rate borrowings to fixed-rate borrowings. Our variable interest rate programming notes incur SOFR-based interest at a weighted average rate of approximately 8.8%. At June 30, 2025, our Term Loan A had an outstanding carrying value of $300.0 million, with a fair value of $292.9 million, and our 5.5% Senior Notes had an outstanding carrying value of $325.1 million, with a fair value of $258.2 million. The following table presents information about our financial instruments that are sensitive to changes in interest rates. The table also presents the cash flows of the principal amounts of the financial instruments, or the cash flows associated with the notional amounts of interest rate derivative instruments, and related weighted-average interest rates by expected maturity or required principal payment dates and the fair value of the instrument as of June 30, 2025: Year Ended December 31, Fair Value 2026 2027 2028 2029 2030 Thereafter Total June 30, 2025 (Amounts in millions) Variable Rates : Term Loan A $ — $ — $ — $ — $ 300.0 $ — $ 300.0 $ 292.9 Average Interest Rate 7.3 % Programming notes $ 88.2 $ — $ — $ — $ — $ — $ 88.2 $ 88.2 Average Interest Rate 8.8 % — — — — — Fixed Rates: 5.5% Senior Notes $ — $ — $ — $ — $ 325.1 $ — $ 325.1 $ 258.2 Average Interest Rate — — — — 5.5 % — 46 Table of Contents STARZ ENTERTAINMENT CORP.