STARZ ENTERTAINMENT CORP /CN/ 10-Q

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS . Overview Prior to the Separation, as further discussed below, the business of Starz Entertainment Corp. (the "Company", "we", "us" or "our"), substantially consisted of the Starz Business of Old Lionsgate’s Media Networks segment, consisting of (i) Starz Networks, which includes the distribution in the U.S. and Canada of STARZ branded premium subscription video services through over-the-top (“OTT”) streaming platforms and distributors, on a direct-to-consumer basis through the Starz App and through wholesale U.S. and Canada multichannel video programming distributors (“MVPDs”), including cable operators, satellite television providers and telecommunications companies (in the aggregate the “Starz Platform”), and (ii) International, which consisted of the OTT distribution of subscription video services outside the U.S. and Canada. In October 2025, Starz changed its operations in Canada resulting in its partner assuming all operational oversight of the service and Starz moving to a content licensing arrangement. Refer to Note 1, Description of Business, Basis of Presentation and Significant Accounting Policies, for further details regarding the Separation, International Restructuring, and Basis of Presentation of the Company and the accompanying financial statements. Separation On May 6, 2025, Lions Gate Entertainment Corp. (“Old Lionsgate”) completed the separation of its studio operations (the “LG Studios Business”) from its media networks operations (the “Starz Business”) pursuant to an arrangement agreement, resulting in two independent publicly traded companies: Lionsgate Studios Corp. (“New Lionsgate”), which now holds the LG Studios Business, and Starz Entertainment Corp., which now holds the Starz Business. As part of the distribution, Old Lionsgate shareholders received shares in both companies, and Starz Entertainment Corp. subsequently executed a 15‑for‑1 reverse stock split, such that every fifteen (15) Starz common shares were consolidated into one Starz common share. For accounting purposes under U.S. GAAP, New Lionsgate is considered the accounting spinnor or divesting entity and Starz is considered the accounting spinnee or divested entity, and the historical results of the Starz Business prior to the transaction have been prepared on a carve‑out basis. Refer to our Transition Report on Form 10‑KT for the nine months ended December 31, 2025 for a full description of the Separation. International Restructuring During 2023, Old Lionsgate began a plan to restructure and shut down its international LIONSGATE+ business, which was finalized with the shutdown of the United Kingdom territory in May 2024. Refer to our Transition Report on Form 10‑KT for the nine months ended December 31, 2025, Note 19, Discontinued Operations , for a full description of the International Restructuring. The international restructuring is included in discontinued operations in the accompanying financial statements. Starz Networks Strategic Content Review During the three and six months ended June 30, 2026, Starz undertook actions to rationalize its content portfolio as part of its ongoing efforts to right-size its content cost structure in response to the evolving macroeconomic and industry environment, including continued declines in traditional linear services and operating as a standalone company following the Separation. These actions included evaluating programming on the Starz Platform, cancelling certain previously ordered programming, and removing and abandoning content determined to have limited strategic value. In April 2026, Starz entered into an agreement to terminate certain live-action films under a post pay-one output licensing agreement. As a result, Starz recognized programming contract termination fees, which were recorded within Restructuring and other costs during the three and six months ended June 30, 2026. Change in Fiscal Year End On May 8, 2025, the Company's Board of Directors approved a change in Starz’s fiscal year end from March 31 to December 31. As a result of the change, the Company filed a Transition Report on Form 10-KT for the nine-month transition period from April 1, 2025 to December 31, 2025. Generally Accepted Accounting Principles These financial statements have been prepared in accordance with U.S. GAAP. 26 Table of Contents STARZ ENTERTAINMENT CORP. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions, that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. The most significant estimates made by management in the preparation of the accompanying financial statements relate to the intangible asset associated with the customer relationships with U.S. MVPDs ("Starz Traditional Affiliates"), which is amortized in the proportion that current period revenue bears to management’s estimate of future revenue over the remaining estimated useful life of the asset; estimates of future viewership used for the amortization of programming content; income taxes including the assessment of valuation allowances for deferred tax assets; and impairment assessments for licensed program rights and intangible assets. Actual results could differ from such estimates. Segments Following the Separation, Starz manages and reports its operating results through one reportable segment, Starz Networks, which includes our consolidated operations. During the six months ended June 30, 2026, International included our operations in India and Southeast Asia. Effective April 1, 2025, we transferred our operations in India and Southeast Asia to New Lionsgate. Given that Starz and New Lionsgate were under common control at the time of the transfer, no gain or loss was recorded related to the transfer. Relationship with New Lionsgate Certain functions that Old Lionsgate provided to Starz prior to the completion of the Separation continue to be provided to us by New Lionsgate under a Transition Services Agreement, while other functions previously provided by Old Lionsgate are now performed using our own resources or third-party service providers. Additionally, under our original series programming license agreements, multiyear theatrical film output licensing agreements and library programming agreements with Old Lionsgate, we continue to distribute New Lionsgate programming. We have incurred certain costs in establishing ourselves as a standalone public company, as well as ongoing additional costs associated with operating as an independent, publicly traded company. See “Components of Results of Operations” below for more information. Components of Results of Operations Revenue We earn our revenue from the distribution of the STARZ branded premium subscription video services through OTT streaming platforms and distributors, on a direct-to-consumer basis through the Starz App and through MVPDs, including cable operators, satellite television providers and telecommunications companies. Pursuant to our distribution agreements, revenue is primarily generated from fees from subscribers who receive the Company's services or based on other factors (variable fee arrangements), or to a lesser extent, may be based on a monthly fixed fee or minimum guarantee, subject to nominal annual escalations. The variable distribution fee arrangements represent sales or usage-based royalties, which are recognized over the period of such sales or usage by our distributor, which is the same period that the content is provided to the distributor. Estimates of revenue generated but not yet reported to us by our distribution partners are made based on an estimated number of subscribers using historical trends and recent reporting. Other fixed fee or minimum guarantee programming revenue is recognized over the contract term based on the continuous delivery of the content to the distributor. Subscribers through the Starz App are billed in advance of the start of their monthly or multi-month membership period and revenue is recognized ratably over each applicable membership period. In connection with the distribution rights obtained outside of the Starz Platform, we license rights to other parties who distribute our content for a fee. New Lionsgate acts as distributor in certain of these arrangements. Expenses Our primary operating expenses include programming amortization, other operating expenses, advertising and marketing expenses, and general and administrative expenses. Other operating expenses include programming related salaries, residual expenses, development costs, provision for credit losses on accounts receivable, operating costs for the direct-to-consumer service, transponder expenses, maintenance and repairs, and foreign exchange gains and losses. 27 Table of Contents STARZ ENTERTAINMENT CORP. Residuals represent amounts payable to various unions or “guilds” such as the Screen Actors Guild - American Federation of Television and Radio Artists, Directors Guild of America, and Writers Guild of America, related to the exhibition or other exploitation of certain owned and licensed content. Advertising and marketing expenses primarily include the costs of advertising, consumer marketing, distributor marketing support and other marketing costs. The level of programming amortization and advertising and marketing expenses can fluctuate from period to period depending on the number of original series and first-run output theatrical movies premiering on the network during the period. Programming cost amortization and advertising and marketing expenses generally increase in periods with increased original series and first-run theatrical movie premieres and decrease in periods with fewer original series and first-run theatrical movie premieres. General and administrative expenses include salaries and other overhead. Prior to the Separation, Old Lionsgate and Legacy Lionsgate Studios entered into a shared services and overhead sharing agreement (the “Shared Services Agreement”). The Shared Services Agreement allocated to the LG Studios Business all of corporate general and administrative expenses of Old Lionsgate, except for an amount of $10.0 million that was charged annually to the Company until the Separation. Now that the Separation is complete, we are incurring expenses for, among other things, directors’ and officers’ and other insurance, director fees and internal and external accounting, legal and administrative resources and fees. CRITICAL ACCOUNTING POLICIES AND ESTIMATES We describe our significant accounting policies in Note 1, Description of Business, Basis of Presentation and Significant Accounting Policies, to the Company's Financial Statements included in our Form 10-KT. There have been no significant changes in our significant accounting policies since December 31, 2025. We describe our significant accounting estimates in Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Form 10-KT. There have been no significant changes in our significant accounting estimates since December 31, 2025. Recent Accounting Pronouncements Refer to Note 1, Description of Business, Basis of Presentation and Significant Accounting Policies , for a discussion of recent accounting guidance. 28 Table of Contents STARZ ENTERTAINMENT CORP. RESULTS OF OPERATIONS Three Months Ended June 30, 2026 Compared to Three Months Ended June 30, 2025 Consolidated Results of Operations The following table sets forth our consolidated results of operations for the three months ended June 30, 2026 and June 30, 2025. Three Months Ended June 30, Increase (Decrease) 2026 2025 Amount Percent (Amounts in millions) Revenue OTT revenue $ 221.3 $ 221.1 $ 0.2 0.1 % Linear and other revenue 86.6 98.6 (12.0) (12.2) % Total revenue 307.9 319.7 (11.8) (3.7) % Expenses: Programming amortization 114.1 162.5 (48.4) (29.8) % Other operating 40.5 36.5 4.0 11.0 % Advertising and marketing 70.3 63.4 6.9 10.9 % General and administrative 40.0 29.1 10.9 37.5 % Depreciation and amortization 67.3 48.7 18.6 38.2 % Restructuring and other 151.2 6.4 144.8 2,262.5 % Total expenses 483.4 346.6 136.8 39.5 % Operating loss (175.5) (26.9) (148.6) 552.4 % Interest expense (13.6) (13.2) (0.4) 3.0 % Interest and other income 0.5 — 0.5 nm Other expense (2.0) (2.5) 0.5 (20.0) % Loss on extinguishment of debt — — — nm Loss from continuing operations (190.6) (42.6) (148.0) 347.4 % Income tax benefit 1.2 0.1 1.1 nm Net loss $ (189.4) $ (42.5) $ (146.9) 345.6 % _______________________ Revenue. Consolidated revenue decreased $11.8 million. The decrease primarily reflects declines in revenue of $13.2 million resulting from the continued decline in traditional linear households, partially offset by an increase in distribution and other revenue of $1.1 million related to the recognition of revenue resulting from the change in our Canadian operations to a content licensing relationship. OTT revenue increased $3.4 million for the three months ended June 30, 2026 compared to the three months ended June 30, 2025, but was partially offset by a decrease of $3.3 million resulting from the change in our Canadian operations to a content licensing relationship. During the three months ended June 30, 2026 and the three months ended June 30, 2025, the following original series premiered on STARZ: Three Months Ended June 30, 2026 Three Months Ended June 30, 2025 Title Premiere Date Title Premiere Date Amadeus Season 1 May 8, 2026 Black Mafia Family Season 4 June 6, 2025 Power Book III: Kanan Season 5 June 12, 2026 The Listeners Season 1 June 12, 2026 29 Table of Contents STARZ ENTERTAINMENT CORP. Programming Amortization . The level of programming amortization for Starz Networks can fluctuate from period to period depending on the number of new original series and first-run output theatrical movies premiering on the network during such period, therefore programming amortization generally increases in periods with more new original series and first-run theatrical movie premieres and decreases in periods with fewer original series and first-run theatrical movie premieres. Three Months Ended June 30, 2026 2025 Increase (Decrease) Amount % of Revenue Amount % of Revenue Amount Percent (Amounts in millions) Programming amortization Starz Networks $ 114.1 37.1 % $ 162.5 50.8 % $ (48.4) (29.8) % _______________________ During the three months ended June 30, 2026 as compared to the three months ended June 30, 2025, programming amortization expense decreased primarily due to fewer premiers of output titles due to the termination of certain live-action films under a post pay-one output licensing agreement in April 2026 and the timing of lower cost original series airing on the Starz Platform. Other Operating Expenses and Advertising and Marketing Expenses. Other operating expenses include programming and operating related salaries, residual expenses, development costs, credit losses on accounts receivable, and foreign exchange gains and losses. The level of other operating expenses and advertising and marketing costs can fluctuate from period to period depending on the number of new original series and first-run output theatrical movies premiering on the Starz Platform during such period. Advertising and marketing costs generally increase in periods with increased original series and first-run theatrical movie premieres and decrease in periods with fewer original series and first-run movie premieres. Other Operating Expenses. Other operating expenses and share-based compensation expense were as follows for the three months ended June 30, 2026 and June 30, 2025: Three Months Ended June 30, 2026 2025 Increase (Decrease) Amount % of Revenue Amount % of Revenue Amount Percent (Amounts in millions) Other operating expenses Starz Networks $ 37.1 12.0 % $ 35.6 11.1 % $ 1.5 4.2 % Share-based compensation expense 3.4 nm 0.9 nm 2.5 nm $ 40.5 13.2 % $ 36.5 11.4 % $ 4.0 11.0 % _______________________ Starz Networks other operating expenses increased $4.0 million during the three months ended June 30, 2026 primarily due to increases in operating employee related expenses. The increase in share-based compensation expense was driven by a higher STRZ share price during the quarter, which increased the value of certain equity awards and the related compensation expense recognized. 30 Table of Contents STARZ ENTERTAINMENT CORP. Advertising and Marketing Expenses. Advertising and marketing expenses were as follows for the three months ended June 30, 2026 and June 30, 2025: Three Months Ended June 30, 2026 2025 Increase (Decrease) Amount % of Revenue Amount % of Revenue Amount Percent (Amounts in millions) Advertising and marketing expenses Starz Networks $ 70.3 22.8 % $ 63.4 19.8 % $ 6.9 10.9 % _______________________ Advertising and marketing expenses increased during the three months ended June 30, 2026 as compared to the three months ended June 30, 2025, primarily due to higher marketing spend related to timing of originals premieres. General and Administrative Expenses. General and administrative expenses and share-based compensation expense were as follows for the three months ended June 30, 2026 and June 30, 2025: Three Months Ended June 30, 2026 2025 Increase (Decrease) Amount % of Revenue Amount % of Revenue Amount Percent (Amounts in millions) General and administrative expenses Starz Networks $ 26.5 8.6 % $ 24.8 7.8 % $ 1.7 6.9 % Share-based compensation expense 13.5 n/a 4.3 n/a 9.2 214.0 % $ 40.0 13.0 % $ 29.1 9.1 % $ 10.9 37.5 % _______________________ During the three months ended June 30, 2026, Starz Networks' general and administrative expenses increased $1.7 million as compared to the three months ended June 30, 2025, primarily due to an increase in employee related costs, partially offset by a decrease in professional services. The increase in share-based compensation expense was driven by a higher STRZ share price during the quarter, which increased the value of certain equity awards and the related compensation expense recognized The following table presents share-based compensation expense by financial statement line item: Three Months Ended June 30, 2026 2025 (Amounts in millions) Share-based compensation expense included in: Operating expense $ 3.4 $ 0.9 General and administrative 13.5 4.3 Restructuring and other 0.1 2.2 $ 17.0 $ 7.4 Depreciation and Amortization Expense. Depreciation and amortization of $67.3 million for the three months ended June 30, 2026 increased $18.6 million from $48.7 million during the three months ended June 30, 2025, due primarily to our Starz Traditional Affiliate customer relationship finite-lived intangible asset, which is amortized based on estimated total revenue expected to be generated from the underlying affiliation agreements over its remaining useful life. During the three months ended March 31, 2026, the Company reduced the life of the Starz Traditional Affiliate customer relationship finite-lived intangible asset from 14 years to 12 years, based on the continued decline in linear revenue resulting in higher amortization expense during the three months ended June 30, 2026. 31 Table of Contents STARZ ENTERTAINMENT CORP. Restructuring and Other. Restructuring and other increased $144.8 million during the three months ended June 30, 2026 as compared to the three months ended June 30, 2025, and includes restructuring costs, certain transaction-related and other expenses, and unusual charges or benefits, as applicable. The increase is primarily the result of contract termination fees incurred during the three months ended June 30, 2026. Refer to Note 8, Restructuring and other, for further details. Three Months Ended June 30, 2026 2025 (Amounts in millions) Restructuring and other Contract termination fees (1) $ 147.2 $ — Content impairments (recoveries) (2) 1.7 (0.3) Transaction and other costs (3) 1.7 4.5 Severance (4) 0.5 — Share-based compensation 0.1 2.2 $ 151.2 $ 6.4 _______________________ (1) In April 2026, Starz entered into an agreement to terminate certain live-action films under a post pay-one output licensing agreement. As a result, Starz recognized programming contract termination fees, which were recorded within Restructuring and other costs during the three months ended June 30, 2026. (2) During the three months ended June 30, 2026 and June 30, 2025, Starz undertook actions to rationalize its content portfolio as part of its ongoing efforts to right-size its content cost structure in response to the evolving macroeconomic and industry environment, including continued declines in traditional linear services and operating as a standalone company following the Separation. These actions included evaluating programming on the Starz Platform, cancelling certain previously ordered programming, and removing and abandoning content determined to have limited strategic value. (3) Transaction and other costs during the three months ended June 30, 2026 and June 30, 2025 reflect costs associated with certain potential strategic transactions, costs associated with certain legal matters, and transaction, integration, and legal costs associated with the Separation. (4) Severance costs for the three months ended June 30, 2026, represent a reduction in our work force due to cost-saving initiatives and the continued decline in traditional linear services. Interest Expense. Interest expense of $13.6 million during the three months ended June 30, 2026 increased $0.4 million from the three months ended June 30, 2025 due primarily to an increase in our programming related obligations. Interest and Other Income. Interest and other income of $0.5 million for the three months ended June 30, 2026 increased by $0.5 million compared to interest and other income of nil for the three months ended June 30, 2025, due to increased cash held in interest-bearing operating bank accounts during the three months ended June 30, 2026. Other Expense. Other expense of $2.0 million for the three months ended June 30, 2026 decreased by $0.5 million compared to other expense of $2.5 million for the three months ended June 30, 2025, which primarily represents the loss recorded related to our monetization of accounts receivable program. See Note 13, Additional Financial Information , to our consolidated financial statements for further details. Income Tax Benefit. We had an income tax benefit of $1.2 million for the three months ended June 30, 2026, compared to an income tax benefit of $0.1 million for the three months ended June 30, 2025. Our income tax provision differs from the U.S. federal statutory rate multiplied by pre-tax income (loss) due to the income tax effects of state income taxes, and changes in the valuation allowance against our deferred tax assets. Net Loss from Continuing Operations. Net loss from continuing operations for the three months ended June 30, 2026 was $189.4 million. This compares to net loss from continuing operations for the three months ended June 30, 2025 of $42.5 million. 32 Table of Contents STARZ ENTERTAINMENT CORP. RESULTS OF OPERATIONS Six Months Ended June 30, 2026 Compared to Six Months Ended June 30, 2025 Consolidated Results of Operations The following table sets forth our consolidated results of operations for the six months ended June 30, 2026 and June 30, 2025. Six Months Ended June 30, Increase (Decrease) 2026 2025 Amount Percent (Amounts in millions) Revenue OTT revenue $ 432.4 $ 446.6 $ (14.2) (3.2) % Linear and other revenue 182.4 203.7 (21.3) (10.5) % Total revenue 614.8 650.3 (35.5) (5.5) % Expenses: Programming amortization 252.4 280.9 (28.5) (10.1) % Other operating 74.8 75.2 (0.4) (0.5) % Advertising and marketing 120.7 122.3 (1.6) (1.3) % General and administrative 69.1 54.5 14.6 26.8 % Depreciation and amortization 135.8 96.8 39.0 40.3 % Restructuring and other 290.3 189.8 100.5 53.0 % Total expenses 943.1 819.5 123.6 15.1 % Operating loss (328.3) (169.2) (159.1) 94.0 % Interest expense (27.5) (24.1) (3.4) 14.1 % Interest and other income 0.9 1.7 (0.8) (47.1) % Other expense (3.8) (4.3) 0.5 (11.6) % Loss on extinguishment of debt — (0.7) 0.7 nm Loss from continuing operations (358.7) (196.6) (162.1) 82.5 % Income tax benefit 4.4 0.1 4.3 nm Net loss $ (354.3) $ (196.5) $ (157.8) 80.3 % _______________________ Revenue. Revenue by segment was as follows for the six months ended June 30, 2026 and June 30, 2025: Six Months Ended June 30, Increase (Decrease) 2026 2025 Amount Percent (Amounts in millions) Revenue Starz Networks $ 614.8 $ 645.9 $ (31.1) (4.8) % International — 4.4 (4.4) nm $ 614.8 $ 650.3 $ (35.5) (5.5) % Consolidated revenue decreased $35.5 million. The decrease in Starz Networks revenue reflects declines of $28.3 million from traditional linear services and $14.2 million from OTT services. These decreases were driven by the continued decline in traditional linear revenue due to lower linear households and a higher mix of discounting on OTT services, including multi-month payment plans. OTT revenue also declined $6.3 million from the prior period due to the change in our Canadian operations to a content licensing relationship resulting in no Canadian OTT revenue in the current period. 33 Table of Contents STARZ ENTERTAINMENT CORP. During the six months ended June 30, 2026 and the six months ended June 30, 2025, the following original series premiered on STARZ: Six Months Ended June 30, 2026 Six Months Ended June 30, 2025 Title Premiere Date Title Premiere Date First Quarter: BMF Documentary Season 2 January 16, 2026 Couple Next Door Season 1 January 17, 2025 The Nowhere Man Season 1 January 16, 2026 Power Book III: Raising Kanan Season 4 March 7, 2025 Outlander Season 8 March 6, 2026 Second Quarter: Amadeus Season 1 May 8, 2026 Black Mafia Family Season 4 June 6, 2025 Power Book III: Kanan Season 5 June 12, 2026 The Listeners Season 1 June 12, 2026 Programming Amortization . The level of programming amortization for Starz Networks can fluctuate from period to period depending on the number of new original series and first-run output theatrical movies premiering on the network during such period. Therefore, programming amortization generally increases in periods where increased new original series and first-run theatrical movies premiere and decreases in periods where fewer original series and first-run theatrical movies premiere. Six Months Ended June 30, 2026 2025 Increase (Decrease) Amount % of Segment Revenue Amount % of Segment Revenue Amount Percent (Amounts in millions) Programming amortization Starz Networks $ 252.4 41.1 % $ 278.6 43.1 % $ (26.2) (9.4) % International — nm 2.3 52.3 % (2.3) nm $ 252.4 41.1 % $ 280.9 43.2 % $ (28.5) (10.1) % _______________________ During the six months ended June 30, 2026 as compared to the six months ended June 30, 2025, Starz Networks' programming amortization expense decreased primarily due to fewer output titles due to the termination of certain live-action films under a post pay-one output licensing agreement in April 2026, partially offset by the timing, and higher number, of original series airing on the Starz Platform. Other Operating Expenses and Advertising and Marketing Expenses. Other operating expenses include programming and operating related salaries, residual expenses, development costs, credit losses on accounts receivable, and foreign exchange gains and losses. The level of other operating expenses and advertising and marketing costs can fluctuate from period to period depending on the number of new original series and first-run output theatrical movies premiering on the Starz Platform during such period. Advertising and marketing costs generally increase in periods with increased original series and first-run theatrical movie premieres and decrease in periods with fewer original series and first-run movie premieres. 34 Table of Contents STARZ ENTERTAINMENT CORP. Other Operating Expenses. Other operating expenses by segment and share-based compensation expense which is not allocated to our segments were as follows for the six months ended June 30, 2026 and June 30, 2025: Six Months Ended June 30, 2026 2025 Increase (Decrease) Amount % of Segment Revenue Amount % of Segment Revenue Amount Percent (Amounts in millions) Other operating expenses Starz Networks $ 70.9 11.5 % $ 73.5 11.4 % $ (2.6) (3.5) % Share-based compensation expense 3.9 nm 1.7 nm 2.2 129.4 % $ 74.8 12.2 % $ 75.2 11.6 % $ (0.4) (0.5) % _______________________ Starz Networks' other operating expenses decreased by $2.6 million during the six months ended June 30, 2026, resulting from a decrease in residuals offset by an increase in operating employee related expenses The increase in share-based compensation expense was driven by a higher STRZ share price during the period, which increased the value of certain employee equity awards and the related compensation expense recognized. Advertising and Marketing Expenses. Advertising and marketing expenses by segment were as follows for the six months ended June 30, 2026 and June 30, 2025: Six Months Ended June 30, 2026 2025 Increase (Decrease) Amount % of Segment Revenue Amount % of Segment Revenue Amount Percent (Amounts in millions) Advertising and marketing expenses Starz Networks $ 120.7 19.6 % $ 122.0 18.9 % $ (1.3) (1.1) % International — nm 0.3 6.8 % (0.3) nm $ 120.7 19.6 % $ 122.3 18.9 % $ (1.6) (1.3) % _______________________ Starz Networks' advertising and marketing expenses decreased during the six months ended June 30, 2026 as compared to the six months ended June 30, 2025, primarily due to lower originals marketing spend. International declined due to the transfer of our operations in India and Southeast Asia to New Lionsgate effective April 1, 2025. 35 Table of Contents STARZ ENTERTAINMENT CORP. General and Administrative Expenses. General and administrative expenses by segment and share-based compensation expense which is not allocated to our segments were as follows for the six months ended June 30, 2026 and 2025: Six Months Ended June 30, 2026 2025 Increase (Decrease) Amount % of Segment Revenue Amount % of Segment Revenue Amount Percent (Amounts in millions) General and administrative expenses Starz Networks $ 52.9 8.6 % $ 46.5 7.2 % $ 6.4 13.8 % International — nm 0.4 9.1 % (0.4) nm Share-based compensation expense 16.2 nm 7.6 nm 8.6 113.2 % $ 69.1 13.0 % $ 54.5 8.4 % $ 14.6 26.8 % _______________________ During the six months ended June 30, 2026, Starz Networks' general and administrative expenses increased $6.4 million as compared to the six months ended June 30, 2025, primarily due to an increase in employee related costs and professional services. International declined due to the transfer of our operations in India and Southeast Asia to New Lionsgate effective April 1, 2025. The increase in share-based compensation expense was driven by a higher STRZ share price during the period, which increased the value of certain employee equity awards and the related compensation expense recognized. The following table presents share-based compensation expense by financial statement line item: Six Months Ended June 30, 2026 2025 (Amounts in millions) Share-based compensation expense included in: Operating expense $ 3.9 $ 1.7 General and administrative 16.2 7.6 Restructuring and other 0.1 2.4 $ 20.2 $ 11.7 Depreciation and Amortization Expense. Depreciation and amortization of $135.8 million for the six months ended June 30, 2026 increased $39.0 million from $96.8 million in the six months ended June 30, 2025, due primarily to our Starz Traditional Affiliate customer relationship finite-lived intangible asset, which is amortized based on estimated total revenue expected to be generated from the underlying affiliation agreements over its remaining useful life. During the three months ended March 31, 2026, the Company reduced the life of the Starz Traditional Affiliate customer relationship finite-lived intangible asset from 14 years to 12 years, based on the continued decline in linear revenue resulting in higher amortization expense during the six months ended June 30, 2026. 36 Table of Contents STARZ ENTERTAINMENT CORP. Restructuring and Other. Restructuring and other increased $100.5 million during the six months ended June 30, 2026 as compared to the six months ended June 30, 2025, and includes restructuring costs, certain transaction-related and other expenses, and unusual charges or benefits, as applicable. The increase is primarily the result of the rationalization of the content portfolio and the termination of certain live-action films under a post pay-one output licensing agreement discussed below, partially offset by lower legal and other costs incurred related to transaction-related expenses as compared to the prior year quarter. Refer to Note 8, Restructuring and other, for further details. Six Months Ended June 30, 2026 2025 (Amounts in millions) Restructuring and other Contract termination fees (1) $ 147.2 $ — Content impairments (2) 129.8 167.4 Transaction and other costs (3) 6.8 18.5 Severance (4) 6.4 1.5 Share-based compensation 0.1 2.4 $ 290.3 $ 189.8 _______________________ (1) In April 2026, Starz entered into an agreement to terminate certain live-action films under a post pay-one output licensing agreement. As a result, Starz recognized programming contract termination fees, which were recorded within Restructuring and other costs during the six months ended June 30, 2026. (2) During the six months ended June 30, 2026 and June 30, 2025, Starz undertook actions to rationalize its content portfolio as part of its ongoing efforts to right-size its content cost structure in response to the evolving macroeconomic and industry environment, including continued declines in traditional linear services and operating as a standalone company following the Separation. These actions included evaluating programming on the Starz Platform, cancelling certain previously ordered programming, and removing and abandoning content determined to have limited strategic value. (3) Transaction and other costs during the six months ended June 30, 2026 and June 30, 2025 reflect costs associated with certain potential strategic transactions, costs associated with certain legal matters, and transaction, integration, and legal costs associated with the Separation. (4) Severance costs for the six months ended June 30, 2026 and June 30, 2025, represent a reduction in our work force due to cost-saving initiatives and the continued decline in traditional linear services. Interest Expense. Interest expense of $27.5 million during the six months ended June 30, 2026 increased $3.4 million from the six months ended June 30, 2025 due primarily to an increase in our programming related obligations. Interest and Other Income. Interest and other income of $0.9 million during the six months ended June 30, 2026 decreased by $0.8 million compared to interest and other income of $1.7 million for the six months ended June 30, 2025, which was related to guarantee fees from Old Lionsgate received during the six months ended June 30, 2025. Other Expense. Other expense of $3.8 million during the six months ended June 30, 2026 decreased by $0.5 million compared to other expense of $4.3 million for the six months ended June 30, 2025, which primarily represents the loss recorded related to our monetization of accounts receivable program. See Note 13, Additional Financial Information , to our consolidated financial statements for further details. Income Tax Benefit. We had an income tax benefit of $4.4 million during the six months ended June 30, 2026, compared to an income tax benefit of $0.1 million for the six months ended June 30, 2025. Our income tax provision differs from the U.S. federal statutory rate multiplied by pre-tax income (loss) due to the income tax effects of state income taxes, and changes in the valuation allowance against our deferred tax assets. Net Loss from Continuing Operations. Net loss from continuing operations for the six months ended June 30, 2026 was $354.3 million. This compares to net loss from continuing operations for the six months ended June 30, 2025 of $196.5 million. 37 Table of Contents STARZ ENTERTAINMENT CORP. Non-GAAP Measure Adjusted OIBDA Adjusted OIBDA is defined as operating income (loss) before depreciation and amortization, adjusted for share-based compensation, restructuring and other costs, and unusual gains or losses, (such as goodwill and intangible asset impairment), when applicable. • Depreciation and amortization as presented on our consolidated statement of operations. • Adjusted share-based compensation represents share-based compensation excluding the impact of the acceleration of certain vesting schedules for equity awards pursuant to certain severance arrangements, which are included in restructuring and other expenses, when applicable. • Restructuring and other includes restructuring costs, certain transaction-related and other expenses, and unusual items, when applicable. • Goodwill impairment and intangible asset impairment, when applicable. Overall: This measure is a non-GAAP financial measure as defined in Regulation G promulgated by the SEC and is in addition to, not a substitute for, or superior to, measures of financial performance prepared in accordance with United States GAAP. The Company uses this non-GAAP measure, among other measures, to evaluate the operating performance of our business. We believe this measure provides useful information to investors regarding our results of operations before non-operating items. Adjusted OIBDA is considered an important measure of the Company’s performance because this measure eliminates amounts that, in management’s opinion, do not necessarily reflect the fundamental performance of the Company’s businesses, are infrequent in occurrence, and in some cases are non-cash expenses. This non-GAAP measure is commonly used in the entertainment industry and by financial analysts and others who follow the industry to measure operating performance. However, not all companies calculate this measure in the same manner and the measure as presented may not be comparable to similarly titled measures presented by other companies due to differences in the methods of calculation and excluded items. A general limitation of this non-GAAP financial measure is that it is not prepared in accordance with U.S. GAAP. This measure should be reviewed in conjunction with the relevant GAAP financial measures and is not presented as an alternative measure of operating loss. The following table sets forth Adjusted OIBDA by segment: Three Months Ended June 30, 2026 2025 Starz Networks (Amounts in millions) Revenue $ 307.9 $ 319.7 Programming amortization (114.1) (162.5) Other operating (37.1) (35.6) Advertising and marketing (70.3) (63.4) General and administrative (26.5) (24.8) Adjusted OIBDA (1) $ 59.9 $ 33.4 38 Table of Contents STARZ ENTERTAINMENT CORP. Six Months Ended June 30, 2026 June 30, 2025 Starz Networks Starz Networks International Total (Amounts in millions) Revenue $ 614.8 $ 645.9 $ 4.4 $ 650.3 Programming amortization (252.4) (278.5) (2.4) (280.9) Other operating (70.9) (73.4) — (73.4) Advertising and marketing (120.7) (122.1) (0.2) (122.3) General and administrative (52.9) (46.4) (0.6) (47.0) Adjusted OIBDA (2) $ 117.9 $ 125.5 $ 1.2 $ 126.7 _______________________ (1) Share-based compensation expense excluded from Adjusted OIBDA for the three months ended June 30, 2026 and June 30, 2025 includes $3.4 million and $0.9 million, respectively, in other operating expenses, and $13.5 million and $4.3 million, respectively, in general and administrative expenses. Refer to Note 6, Capital Stock, for further details. Starz Networks Adjusted OIBDA of $59.9 million for the three months ended June 30, 2026, increased by $26.5 million from the three months ended June 30, 2025. Such increase was primarily due to lower programming amortization expense which was offset by lower revenue and increases in other operating expenses, advertising and marketing expenses and general and administrative expenses. (2) Share-based compensation expense excluded from Adjusted OIBDA for the six months ended June 30, 2026 and June 30, 2025 includes $3.9 million and $1.7 million, respectively, in other operating expenses, and $16.2 million and $7.6 million, respectively, in general and administrative expenses. Refer to Note 6, Capital Stock, for further details. Starz Networks Adjusted OIBDA of $117.9 million for the six months ended June 30, 2026, decreased by $7.6 million from the six months ended June 30, 2025. Such decrease was primarily due to lower revenue and increased general and administrative expenses offset by lower programming amortization expense, other operating expenses, and advertising and marketing expenses. LIQUIDITY AND CAPITAL RESOURCES Sources of Cash Our liquidity and capital resources for the three and six months ended June 30, 2026 were provided principally through cash generated from operations, our $150 million revolving credit facility, programming related obligations, and the monetization of trade accounts receivable as discussed below. As of June 30, 2026 and June 30, 2025, we had cash and cash equivalents of $59.6 million and $51.6 million, respectively. Credit Agreement and Existing Notes As of June 30, 2026, we had $300.0 million and $325.1 million, respectively, outstanding under our new Term Loan A and 5.5% Senior Notes due 2029. No amounts were outstanding under our $150.0 million revolving credit facility. Refer to Note 3, Debt , for a discussion of our corporate debt. Programming Related Obligations We utilize programming related obligations to fund certain of our film and television productions or licenses during production through the time the program airs on the Starz Platform. Our programming related obligations include unsecured programming notes and secured production loans. Programming notes and production loans represent individual loans for the license or production of certain of our original series. The Company had $62.1 million of programming notes outstanding which are included in current programming related obligations with repayment dates from July 2026 through August 2026. As of June 30, 2026, current and non-current p rogramming related obligations include secured production loans with outstanding balances of $48.7 million due in January 2027 and $6.8 million due in May 2028. 39 Table of Contents STARZ ENTERTAINMENT CORP. Refer to Note 4, Programming Related Obligations , for a discussion of our programming related obligations. Accounts Receivable Monetization Our accounts receivable monetization program includes individual agreements to monetize certain of our trade accounts receivable directly with third-party purchasers. Refer to Note 13, Additional Financial Information, for a discussion of our accounts receivable monetization program. Uses of Cash As a stand-alone company, our principal uses of cash include payments for licensing, acquisition, and production of our programming content, advertising and marketing expenditures and general and administrative expenses. We also use cash for debt service (i.e. principal and interest payments) requirements, and capital expenditures. We may from time to time seek to retire or purchase or refinance our outstanding debt through cash purchases, in open market purchases, privately negotiated transactions, refinancings, or otherwise. Such repurchases or exchanges or refinancings, if any, will depend on prevailing market conditions, our liquidity requirements, our assessment of opportunities to lower interest expense, contractual restrictions and other factors, and such repurchases or exchanges could result in a gain or loss from the early extinguishment of debt. The amounts involved may be material. Anticipated Cash Requirements. The nature of our business is such that significant initial expenditures are required to acquire, produce, and market our programming content, while revenue from the exhibition of our programming content is earned over an extended period of time after their acquisition. Under the Starz Networks Strategic Content Review and International Restructuring, the liability associated with the future cash outlay less estimated recoveries for contractual commitments related to programming content restructuring charges and contract termination fees recorded through June 30, 2026 is estimated to be approximately $205.0 million. During the six months ended June 30, 2026, we paid $61.9 million of this programming content restructuring liability. See, Note 1, Description of Business, Basis of Presentation and Significant Accounting Policies , for further details. We currently believe that cash flow from operations, cash on hand, availability under our $150 million senior secured revolving credit facility which is undrawn at June 30, 2026, monetization of trade accounts receivable and available programming related obligations will be adequate to meet known operational cash and debt service requirements (i.e. principal and interest payments) for the next twelve months and beyond, including the funding of programming content which includes amounts under our originals licensing and production agreements, theatrical output and library agreements and remaining impairment charges. We monitor our cash flow, liquidity, availability, capital base, content spending, capital expenditures, debt service and leverage ratios with the long-term goal of maintaining our credit worthiness. Our current financing strategy is to fund operations and to leverage investments in programming content in the short-term and long-term through our cash flow from operations, the monetization of trade accounts receivable, borrowings from our $150.0 million revolving credit facility which is undrawn at June 30, 2026, and available programming related obligations. In addition, we may acquire businesses or assets, including individual films or libraries that are complementary to our business. Any such transaction could be financed through our cash flow from operations, credit facilities, and/or equity or debt financing. If additional financing beyond our existing sources cannot fund such transactions, there is no assurance that such financing will be available on terms acceptable to us. Our ability to obtain any additional financing will depend on, among other things, our business plans, operating performance, the condition of the capital markets at the time we seek financing, and debt ratings assigned by independent rating agencies. Additionally, circumstances such as the war in the Middle East and other global events have from time to time caused disruption in the capital markets, which could make financing more difficult and/or expensive, and we may not be able to obtain such financing. We may also dispose of assets and use the net proceeds from such dispositions to fund operations or such acquisitions, or to repay debt. Material Cash Requirements from Known Contractual Obligations and Commitments The following table sets forth our significant contractual and other obligations as of June 30, 2026 and the estimated timing of payment: 40 Table of Contents STARZ ENTERTAINMENT CORP. Total Next 12 Months Beyond 12 Months (Amounts in millions) Future annual repayment of debt and other obligations recorded as of June 30, 2026 (on-balance sheet arrangements) (1) Term Loan A $ 300.0 $ 15.0 $ 285.0 5.5% Senior Notes 325.1 — 325.1 Programming related obligations (2) 117.6 110.8 6.8 Programming related payables (3) 236.0 212.9 23.1 Contract termination liability (4) 147.2 48.0 99.2 Operating lease obligations 54.5 11.4 43.1 $ 1,180.4 $ 398.1 $ 782.3 Contractual commitments by expected repayment date (off-balance sheet arrangements) Programming related payables commitments (5) $ 184.8 $ 155.7 $ 29.1 Interest payments (6) 132.3 39.9 92.4 Other contractual obligations (7) 50.5 45.6 4.9 Contract termination liability accretion 26.1 15.4 10.7 393.7 256.6 137.1 Total future repayment of debt and other commitments under contractual obligations $ 1,574.1 $ 654.7 $ 919.4 ___________________ (1) Refer to Note 3, Debt , for further information on our corporate debt and financing transactions following the completion of the Separation. Refer to Note 4, Programming Related Obligations , for further information on programming related obligations. (2) Programming related obligations include outstanding programming notes with a balance of $62.1 million to be repaid from July 2026 through August 2026, and secured production loans with an outstanding total balance of $55.5 million, due in January 2027 and May 2028. Refer to Note 4, Programming Related Obligations , for further information on programming related obligations. (3) Programming related payables at June 30, 2026 include $41.4 million of restructuring related content liabilities. (4) The contract termination liability reflects termination fees payable in connection with our agreement to terminate certain live-action films under a post-pay-one output licensing arrangement. The termination cost is based on an agreed fee schedule which includes a measure of theatrical box office performance. Some of the underlying films have not yet been released theatrically, therefore the liability is an estimate and the final termination cost may differ. (5) Programming related payables commitments include program rights commitments not reflected on the consolidated balance sheets as they do not currently meet the criteria for recognition. Program rights commitments represent contractual commitments under programming license agreements related to third party commitments for our original series in production and films that are not available for exhibition until some future date (see below for further details). (6) Includes cash interest payments on the Company's corporate debt as of June 30, 2026, including Term Loan A, 5.5% Senior Notes, and operating lease liabilities imputed interest. (7) Includes contractual obligations related to advertising and marketing spend, executive employment arrangements, and affiliate marketing agreements. We have an exclusive multi-year output licensing agreement with New Lionsgate for Lionsgate label titles theatrically released in the U.S. that started January 1, 2022, and for Summit label titles theatrically released in the U.S. that started January 1, 2023. The programming fees paid by us under the arrangements are based on the quantity and domestic theatrical exhibition receipts of qualifying films. We are unable to estimate the amounts to be paid under this agreement for films that have not yet been released in theaters, however, such amounts are expected to be significant. 41 Table of Contents STARZ ENTERTAINMENT CORP. On January 1, 2022, we entered into an exclusive multiyear post pay-one output licensing agreement with Universal for live-action films theatrically released in the U.S. The Universal agreement provided us with rights to exhibit these films immediately following their pay-one windows. The programming fees paid by us under this agreement are based on the quantity and domestic theatrical exhibition receipts of qualifying films. In April 2026, Starz entered into an agreement to terminate certain live-action films under this post pay-one output licensing agreement. As a result, Starz recognized a programming contract termination liability, which was recorded in Restructuring and other costs during the three and six months ended June 30, 2026. Remaining Revenue Performance Obligations Remaining revenue performance obligations represent deferred revenue on the balance sheet. As described in Note 5, Fair Value Measurements , to the accompanying financial statements, remaining performance obligations were $53.4 million as of June 30, 2026 and $52.8 million as of December 31, 2025. Discussion of Operating, Investing, Financing Cash Flows Six Months Ended June 30, 2026 Compared to Six Months Ended June 30, 2025 Cash and cash equivalents increased by $23.9 million for the six months ended June 30, 2026 and increased by $37.4 million for the six months ended June 30, 2025. Components of these changes are discussed below in more detail. Operating Activities. Cash flows provided by operating activities for the six months ended June 30, 2026 and June 30, 2025 were as follows: Six Months Ended June 30, 2026 vs 2025 2026 2025 Net Change (Amounts in millions) Net cash flows provided by operating activities $ 45.0 1.9 $ 43.1 The increase in cash provided by operating activities in the six months ended June 30, 2026, compared to the six months ended June 30, 2025 is primarily due to lower cash paid for programming content along with the timing of receipts of accounts receivable, and payments of accounts payable, and accrued liabilities. Cash paid for programming content totaled $294.9 million and $394.3 million for the six months ended June 30, 2026 and June 30, 2025, respectively. Investing Activities. Cash (used in) provided by investing activities for the six months ended June 30, 2026 and June 30, 2025 were as follows: Six Months Ended June 30, 2026 vs 2025 2026 2025 Net Change (Amounts in millions) Capital expenditures $ (9.7) $ (10.8) $ 1.1 Deferred purchase price of receivables sold 1.2 0.5 0.7 New Lionsgate revolving credit facility – increases — 455.5 (455.5) New Lionsgate revolving credit facility – decreases — (321.5) 321.5 Net cash flows (used in) provided by investing activities $ (8.5) $ 123.7 $ (132.2) Cash flows used in investing activities for the six months ended June 30, 2026 primarily reflects cash used for capital expenditures. Cash flows provided by investing activities for the six months ended June 30, 2025, primarily reflects cash provided to the LG Studios Business through the Intercompany Revolver partially offset by the cash used for capital expenditures. Financing Activities. Cash flows used in financing activities for the six months ended June 30, 2026 and June 30, 2025 were as follows: 42 Table of Contents STARZ ENTERTAINMENT CORP. Six Months Ended June 30, 2026 vs 2025 2026 2025 Net Change (Amounts in millions) Distribution of Exchange Notes to New Lionsgate upon Separation $ — $ (389.9) $ 389.9 Debt – borrowings, net of debt issuance and redemption costs — 388.3 (388.3) Debt repayments — (96.5) 96.5 Net borrowings of debt — 291.8 (291.8) Programming related obligations – borrowings 238.2 290.6 (52.4) Programming related obligations – repayments (251.0) (278.7) 27.7 Net (repayments) borrowings from programming related obligations (12.8) 11.9 (24.7) Exercise of stock options 0.2 — 0.2 Parent net investment — (2.0) 2.0 Net cash flows used in financing activities $ (12.6) $ (88.2) $ 75.6 _____________ Cash flows used in financing activities for the six months ended June 30, 2026 reflects $12.8 million in net repayments of our programming related obligations. Cash flows used in financing activities for the six months ended June 30, 2025 reflects the release of the Company's obligation towards the $389.9 million of Exchange Notes at the date of Separation, net borrowings under the Old Lionsgate Revolving Credit Facility of $291.8 million and from programming related obligations of $11.9 million. In addition, $2.0 million of intercompany activity with Old Lionsgate was reflected as cash flows used in financing activities in the six months ended June 30, 2025. 43 Table of Contents STARZ ENTERTAINMENT CORP.