Production Delays Cost Starz 50 Months of Subscriber ‘Opportunity’: CEO

Starz, even “in a very competitive environment,” added 1.7 million streaming subscribers in fiscal Q3 ended Dec. 31, including 600,000 domestically, said Lionsgate CEO Jon Feltheimer on a Thursday call. Lionsgate entered the fiscal year having “significantly ramped” its investment in Starz original programming, but COVID-19-driven production delays on multiple series, including an 11-month delay on “fan favorite” Outlander, “pushed back the full benefit of that investment,” he said. “This resulted in diminished subscriber growth in the first half of the year relative to our expectations.” The company sees “subscriber acquisition months” as “really key” for driving the Starz business, said Starz CEO Jeffrey Hirsch. “When you look at the original plan versus where we are today, it's about a total of 50 months of subscriber acquisition opportunity that we lost by moving content around,” he said. Outlander is “one of our big tent poles,” a “huge fan favorite,” he said. The series draws about 7 million “multi-platform views a week, which is one of the bigger shows on television, a very passionate fan base,” he said. “Missing a year of that content, it really hurts the subscriber growth, and you saw that in the first half of the year.” The eight-episode sixth season is scheduled to debut March 6. As a major feature-film studio trying to strike the right balance between theatrical exhibition and direct-to-consumer streaming, Lionsgate has shown it can make profitable films that “live comfortably” in both the theatrical and subscription VOD worlds, “from day-and-date multi-platform releases with a 92% profitability rate to larger movies that will benefit from hybrid releases,” said Feltheimer. “As a studio whose signature has always been diversified slates, allowing us to play in every space, our ability to tackle the challenges of a shifting and uncertain box office is more of a natural evolution than a pivot.” The way the industry is “shaping up” among the “broad-based” streaming services, “everybody is really competing to be that first SVOD in the home,” said Hirsch. “Couple that with the fact that we believe that there's going to be four to six SVODs per home, it sets Starz up to be this really great premium add-on tier as a way for those broad-based services to compete.” Lionsgate Class A shares closed down 8% Friday at $13.54.