Everybody. Welcome to the 47th Annual Raymond James Institutional Investors Conference, now in Orlando. I've been at 30 of these. I'm Ric Prentiss, Head of TMT Research. As we call it, towers, media, and telecom, and satellite services is our definition of TMT. I'm really excited to be kicking off a good set of meetings. Going to turn it over to Brent Penter, who's going to run this one. Brent? Yeah. Thanks, Ric. Thanks everyone for being here with us. First session of the conference at the Raymond James Institutional Investors Conference. I'm joined here by Jeffrey Hirsch, President and CEO of Starz. Jeff, thanks for being with us. Good morning. Thanks for having me. Jeff, we have a lot of generalist, all-cap kind of investors here. I think a lot of people are familiar with the Starz brand. Can you give us a quick overview of Starz as a company and what differentiates you all from some of your streaming competitors? Yeah. Good morning, everybody. Thank you for being at the 7:30 A.M. presentation. Let me start off by saying what we're not. Right? What we're not is a broad-based, massive global media company with multiple lines of businesses that tries to serve all things to everybody in the home. We don't have content for kids. We don't have news. We don't have sports. We are not competing with the large-scale broad-based streamers in the U.S. today. What we are is a complementary service to those services. If you think back to the cable business pre-2015, when people were trying to decide to have the first broad-based video service in their home, whether it was Comcast versus DirecTV, or Charter with DirecTV, Starz was always a kind of specialty service that was sold on top of broad-based streaming. That's how we've replicated Starz into the digital world today. If you look at Amazon as a partner, we're sold on top of Amazon. If you look at Hulu, we're sold on top of Hulu. We are focused on two core demos, women and underrepresented audiences, and we do that more focused on and more depth than anybody else. We have positioned the business to be complementary to almost all the streaming services out there today. We continue to think that that's a really great place for us to be. Again, if you look at the last quarter, we just posted, we've had great growth both on the top line and the bottom line. Starting to really convert free cash flow as we have separated from Lionsgate. Again, we're this complementary specialty retailer sitting within the big broad-based streaming business in the U.S. today. Right. You are 70% revenue from the digital side of things. That digital revenue is growing. Can you take us through the kind of revenue, EBITDA, free cash flow algorithm? I mean, we're modeling kind of total revenue, maybe flat to slightly down, EBITDA growing on top of that, driven by margin growth, you should be ramping free cash flow. The last 10 years, we've made a very significant pivot from the linear business to the digital business. We've done that profitably throughout that period of time. When I started in the business in 2015, 100% of our revenue came from the cable operators or the linear business. Today, 70% of our business comes from digital, whether it's from our being sold on top of Amazon, or top of Hulu, or top of Roku, or our own D2C app. We've really transitioned the business from being linear to digital first, we look more like Netflix does than some of the other streamers. What we've been able to do throughout that entire time is keep being profitable. Because we took this kind of partner approach that I talked about, we never actually leaned into overspending content because we just saw digital as the evolution of a revenue channel. Much like Comcast was a channel, much like DirecTV was a channel, streaming was a channel. Amazon to us is a digital wholesaler, just like the cable companies were. We didn't invest heavily in content to drive customers from one side to the other because we took an agnostic approach against that's allowed us to be fully distributed everywhere and drive digital revenue while being profitable. What you've seen over the last couple of years is a business that has continued to drive revenue growth and stability. Some years it's flat, some years it's up from those partners. We've been able to manage the cost side of the business so that we can continue to drive our margin back up. We're at a 15% margin growing to a 16% margin in 2026 with a guide to get to a 20% margin coming out of calendar 2028. Really a lot of that is controlling the cost side of the business. We have been owned by Lionsgate for the last nine years. We separated about three quarters ago. There was a lot of cost put on the business working within a studio operation that was not necessary for a network only to have. As we de-age our content, which means we put new shows on the air versus older shows, we bring that content cost down. We are able to start drive margin and free cash flow up. This past year, I think we spent around $720 million-$725 million on content. In 2026, we'll be sub $650 million, you're starting to see us de-age and put the cost structure back into the right place, which drives margin and free cash flow to a better place for us. How should we think about that content spend going forward beyond 2026? Is that going to be something that continues to come down, or is it something that was maybe a reset and at some point starts growing again? What does that trajectory look like? I think you'll see us try to push it back down to around $600 million, that's kind of where we think the business should be. That's a big component of us getting to that 20% margin. We just announced we finished "Fightland," which is our first own production. That's a Starz show that we just completed in the U.K. with 50 Cent. That show's unit economics is 30%-40% below what we were getting from our studio partner before. Because we own it, we can sell it outside the U.S. to bring that cost down even further. As we get to the point where 50% of the content is owned by Starz, and we can control that entry point and have international sales, you'll continue to see costs come down over time. One other thing you announced this most recent quarter is that you're no longer going to be reporting subscribers, that joins the rest of the industry. First Netflix, then Disney, then the very same day that you said you were going to stop reporting subscribers, Warner Bros. said they were going to stop reporting subscribers. What does that tell us about the way that you're going to be running the business now? I think not chasing the quarterly subscriber rat race is really healthy for the long-term growth of the business. Right? If you think about Starz long term, you think about 1%-3% revenue growth, converting around a 20% margin, converting 70% of that margin to unlevered free cash flow. Very little CapEx. We have a lot of NOLs. We're not a cash taxpayer. There's a huge conversion of that profit into unlevered free cash flow and actually free cash flow. What you see when you actually stop worrying about the quarterly cadence of subs is you start to really do things around pricing and promotion and lifetime value for the long-term health of the business versus worrying about the quarter. I can tell you the last quarter when we announced internally we were going to stop doing it, the amount of pressure that came off of the acquisitions team was massive. They just feel like they can do things for the long-term health of the business versus chasing a quarterly cadence. Marketing is much more efficient because you're not chasing your tail at the end of the quarters. I think ultimately what you're seeing and what we saw in the fourth quarter, very strong quarter on revenue in terms of the total business. What we're already seeing is the ARPU and the subs that we've got on in the quarter have continued into the start of the year in January and February off to a very strong start on revenue. What benefits does that have on churn as well? Look, churn is a nature of what comes in, comes out, right? I used to say in the cable business, "Crap in is crap out." Right? When you are, especially in a December quarter where you have a lot of heavily discounted holiday promotions. We have partners who used to do these $0.99 for two-month offers. They're great because you get a lot of optics with a lot of subs coming on, but by the time you get to February, most of them are gone. Right? Because they can't handle going from $0.99 to $10. Right? What you now do is you do a lot less discounting, and that ramp to retail is a lot easier for consumers, which ultimately means you drive full revenue up and long-term value up because you're getting healthier subs coming on the network, converting that to obviously profit and free cash flow. It's really better for the long-term health of the business. Even if you're not going to be reporting subs, we on the sell side and investors on the buy side still think about this P times Q equation. You're not going to be reporting subs anymore, so we can't hold you to it, but should we still expect this to be a business that, maybe not every quarter, but on a year-on-year basis should continue to grow subs? Well, look, there's only two ways to grow revenue, right? Growing subs and growing rate. You can't lean on the rate card every year because you'll price your service out of it. We continue to focus internally on growing subs and growing the business. In order to grow revenue, you've got to grow subs. Just because we're not reporting it doesn't mean we're not paying attention to it, trust me. The other part of your business, 30% of your business is still from cable. That part is getting smaller, but it's still a substantial part of your business. How do you think about the tail of linear subs over the next few years? Do you think there's a floor at some point? Does it start to asymptote at some point, or is it still full speed ahead with the subscriber declines? The difference for us, again, we're not a fully distributed ad-supported network, right? We're somewhere between 18% and 20% penetrated in our partners. I still think there's a lot of opportunity to grow on the linear side because we're not fully distributed. If you look at what Charter's been doing with including the streaming services with the linear side of the business, they actually showed growth last quarter. I'm not sure if the business will ever turn around and grow, but it could stabilize. We work with our partners every day, and I think 50% of the cable franchisor broadband-onlys today, that's a real opportunity for us to sell our app on top of cable broadband-onlys to put video in the home. We're working with our partners to get there. I do think we've seen it slow a little bit, but I think it's a generational thing, and as we continue to go through time, that will continue to erode. The future of the linear business, we think, is virtual MVPDs, YouTube TV, Hulu + Live TV, Fubo, services like that. Can you just talk about your relationships with those companies, and what is your ability through those partners to drive additional adoption of Starz? We're distributed on all of the virtual MVPDs today. Hulu is a wonderful platform for us. I'm hoping they get through their integration with D+ sooner so that we can be sold within D+ as quickly as possible. Roku just reported a huge subscriber addition number for SVOD. I think we're a big piece of that, we're excited about that. YouTube, we're obviously on that platform as well. We're looking as folks launch ad-supported tiers, we're looking to be bundled with those because that brings the entry price point down lower and allows more share of wallet for a consumer for us to be there. As I said earlier, we're agnostic to distribution. We look at the consumer and say if the consumer wants to watch video somewhere and they want to watch Starz, we want to be distributed there so they can buy Starz where they want to watch it. Our direct-to-consumer business is a very healthy business. It's our second-biggest distribution platform. We would prefer to continue to have more distribution partners. You have large-scale streamers today that have not started to bundle other third-party services. I think that will change in the next year or two. There was a Business Insider rumor about Peacock launching third-party services there. I think you have Netflix with their ad-supported tier is pretty big, and there could be some push there. I think Paramount, once they settle what they're doing, will become a central point for all third parties on top of their platform as well. If you think about the next couple of years, there's a lot of distribution for Starz that we actually haven't even leaned into yet, thus driving more subscribers. Yeah. What portion of your subscribers come from third-party platforms? We're basically two-thirds wholesale, one-third retail. Okay. That's a good way to frame it. Okay. You mentioned Paramount, and obviously topic du jour as we were talking before the presentation. Paramount, Warner Bros., they have their M&A call this morning. As you all sit and watch from the sidelines, what does that deal mean for the industry, and what does that mean as you for a competitor? That's a really good question. I don't really view us as a competitor with them. I think we're going to be super complementary with them. We've had a few conversations already about adding Starz as the third party on top of that product. I think that's good. I think uncertainty, as you all will tell me in the room, is probably a terrible word in the investment community. Having some kind of certainty where things are going is a good thing. That's interesting. From a growth or a scale perspective for Starz, these large businesses that have a lot of leverage on them are opportunities for us. We are a smaller player, but we have a very unique and scalable tech stack with a data stack that we can really build stuff around. As these large companies continue to look at who they are and what they do and what assets they can shed, there may be opportunities for us to scale our business around some of these networks that are not getting the focus that they should, that align to our demos, that are dying within larger corporations, that we may be able to pull out of there and build some revenue diversification for us, whether it's an AVOD business or additional content into our SVOD business. I think the opportunity as these settle for Starz to grow and scale is going to be very interesting. Yeah. You touched on it and you all talked about it last week on your earnings call, the opportunity for you all to participate in M&A. Given your size, I think people would naturally think of you as a target, but it sounded like the angle came from you could be a buyer as well. Can you just talk more about what your platform could bring to those linear networks, and what does define scale for you in that business? Yeah. It's a good question. I think if you look at our consumer base of women and underrepresented audiences as an anchor for who we are and what we want to do, we want to continue to grow that business. I think there's an opportunity to scale our business with diversification around an AVOD business next to our SVOD business. Unfortunately, today, our content is too adult, it's too racy, and we don't have enough of it to actually scale into an ad-supported business. If you look around the landscape today, there's a lot of networks that are kind of marooned on the linear side that don't have a digital future, right? They have these great brands that are still consumers are really interested in, but the consumer moved from their purchase power and their eyeballs from the linear business to the digital business. Those networks never moved with their consumer, for either they were too part of a big company that wasn't focused on them, or they didn't have the technical wherewithal to do it. There's an opportunity for us, whether it's on a purchase agreement or a commercial agreement, and we're working on a couple of commercial agreements today, to take the infrastructure that we built on the digital side and our app and actually give those companies a digital future by moving their product from linear to digital, reconnecting them to the consumer that wants to watch them, and launching an AVOD business to diversify our revenue. We think we can scale the business that way, and we think we can do it pretty reasonably. Without putting a lot of leverage on our business. I've operated in a very high leverage business for the last nine years and don't plan on ever doing that again. As you can see, last quarter, we're down to 2.9 times leverage on our path to down to 2.5 times. We're really focused on that. I think there's an opportunity to really go out and partner with some of these companies to grab networks that are marooned and give them a digital future that they don't have today, and actually build revenue diversification on top of Starz on scale. Okay. You talked about your leverage, and it is coming down 2.9 times. You're getting pretty close to that 2.5 times target. Beyond just the opportunity to look at other cable networks, what are your capital allocation priorities internally? We talked a bit on the earnings call about it, but given where your stock is trading, how do you think about shareholder returns, whether that be through buybacks or even if you got to consistent cash flow dividend type returns? Yeah. Right now we're really just focusing on generating free cash flow and getting leverage down to 2.5 times. We've stated that by the end of next year, we'll be at 2.7 times, and so we're focused on that. I think that's a good problem to have when we get there, and I think the board and I will have a conversation about what we want to do at that point. Obviously, investing in content and continuing to drive growth is going to be important for us. What kind of shareholder return we do, we'll worry about that when we get there. Today, we're just focused on we're three quarters out from our separation from Lionsgate. We're really starting to show what a network can do in terms of profitability and free cash flow conversion. You'll see in 2026, we'll have OTT revenue growth. We'll continue to grow EBITDA, adjusted EBITDA, and we'll convert free cash. Unlevered free cash will come in somewhere between $80 million-$120 million. Those are the goals that we're really focused on right now. For us to start to worry about what happens after those goals is really not what we want to do right now. We're just laser-focused on demonstrating to the investment community just like we did delivering on all our goals this year, delivering on all our goals next year. Okay. You talk about competition and who are your competitors versus who aren't your competitors. This has been a big conversation given the M&A going on right now and how to think about YouTube and TikTok and short-form video. Have you all seen any noticeable impact from these platforms? It may not be easy to tell what else people are watching if they're not watching Starz, but how do you think about YouTube short-form video in terms of do you compete with them? Look, we compete with everybody for eyeballs on a service, but you have to remember, our average consumer on linear is about 50 years old and paying $10 or $11. Our digital consumer is about 10 years younger than that and paying $11, right? There's a big difference in the consumer that's watching TikTok and watching our consumer, and I get the question a lot, which is, "Aren't you worried that the consumer on TikTok is going to eat your lunch and stop watching your content?" 10 years from now, I still think our consumers, as long as we continue to put on great content that's focused on our demos that they love to watch and they're obsessed with, we'll continue to have that consumer. I also think as a lot of those younger consumers start to age up and become families, I think their viewing habits will change. Will they walk away from those platforms or not? I don't know. I think the death of the business is greatly exaggerated based on our viewership in terms of their age and what their disposable income is. One of the things that we've seen, and we've done a lot of sampling trying to get put on Snap and put on TikTok to download the app. It's fun to watch it, but when they get to the paywall and they have to pay $11, it falls off. You can see it there. It's a much different consumer for us. Will we integrate feeds from those services into our app so that we can complete the kind of marketing or promotional circle around the content that we put on there to bring them in? Some of the stuff that our younger actors do, absolutely, we'll do that. I'm not ignoring it and saying it's not a threat because we look at everything, I just think if you look at the consumer, that our consumerism, what they're willing to pay versus their consumer and their unwillingness to pay, it's kind of a different group right now. Eventually, over the next 20, 30 years, maybe they do interact. If I'm still sitting here 30 years from now worrying about TikTok, we got bigger problems. We look at it all the time, I just think it's the willingness to pay versus the unwillingness to pay on a subscription basis is a fundamentally different consumer and viewership pattern. Yeah. Along those same lines, AI, obviously a major topic. I'm sure every company at this conference will probably be asked about how does AI affect their business, with you all and in the video business, Sora and Seedance, these things are causing consternation, maybe opportunity. How do you think about where the opportunities are in AI? Maybe on the cost side, content creation side, whether you think of it as a threat in any way. Look, I think there's four or five places that we're using it today, it's really impactful to the business. Obviously, first, the obvious one is in content. Spartacus just came off the air. We used a lot of AI in Spartacus to make Spartacus feel bigger. In post, it was a great way to do it. I think the community will continue to lean into that, cost per episode should come down based on finishing shows and doing-- You don't have to blow up 100 cars in real life to do it on a show. You can do it that way. It's a much better thing. In the building, training, all the mundane stuff that you have to do as a company for employees, you can do it with AI tools, that's a way to save headcount. That's not the sexiest thing, the use of it, but it's real and it's probably the easiest way to do it. The big thing for us is on the revenue side. I think this is the really unsexy part of AI, but it's really impactful for us. We've got 10 years of acquisition data, retention data, pricing data, content scheduling, content purchasing, and all of that data leads into efficiencies in terms of how do you schedule the network, in terms of what shows go where, what movies go with those shows, and how do you schedule the network to drive lifetime value and more engagement and more viewership. On the same note, what ad on what platform at what price drives the most efficient acquisition? What retention offer from that price and what they watch drives lifetime value? All of the kind of revenue side of the business where we have 10 years of data and it's hundreds of millions of inputs, there's efficiencies in those hills that make us better. It's very hard for the human eye to see those efficiencies, so we're using AI tools now to kind of comb through all that data to drive acquisition efficiencies, schedule efficiencies, purchasing efficiencies on what we buy. All of that together gives us kind of a really good line of sight to bring costs down and drive incremental revenue on the business, and it's hard to see it without those tools. To me, that's the most exciting part of AI. Blowing this stuff up is always fun, but if we can cut marketing, be much more efficient and drive lifetime value with just what the data we have, that's really impactful. Yeah. AI was clearly a big part of the guild negotiations three years ago. We're sitting here, it's hard to believe, March 2026. Us Gator basketball fans are excited about March Madness, but that also means May is coming soon. May 1st, the WGA expiration. As we all have those memories from three years ago about the writer's strike, the actor's strike. How can we get confidence, looking ahead a couple of months, that we won't have to go through that again? Yeah, look, as a smaller player, we're not going to have a seat at the table, but we're part of, obviously, the conversation. Look, I hope that everybody gets. As I grew up with my dad, it's a fair day's pay for a fair day's work, and I think that's important. I hope we can avoid any kind of stoppage again. I think it has been unhealthy for the businesses over the last couple of years. You've seen that, the downward push of what we've seen and stuff outside the country, and that's just unfortunate because I think, where we sit in the industry in the U.S. and California, there's some of the best talent in the world. A lot of them are not working today, so that's unfortunate. I hope we can figure out how to get to the right place and not have a stoppage because nothing good comes from that, and we've seen that historically. Yeah. Okay. Earlier you sounded excited about your slate, and I think you have reason to be excited. Can you just talk about what kind of shows you have coming out over the next few months and kind of how you keep the cadence of content consistent, so that when someone subscribes for one show, you have the next show coming in right after it, the next Lionsgate movie, whatever it may be to keep them subscribed? Yeah. Look, I'm really excited about our business. We've spent the last three quarters publicly unwinding a lot of the being run and owned by a studio, which obviously is not aligned with what a network does, right or wrong. The business is really starting to show out the potential that we can do going forward as a focused standalone network, and you've seen that in our guide in 2026. The slate in the development pipeline I think are the best that we've had. Tonight, we present the premiere episode of "Outlander's" final season. That'll come on this weekend, and I think that's a bittersweet premiere for the fact that it's been on for 13 years and it's the last season. We launched "Blood of My Blood," which was the prequel out of that. It took great success. We come into the ending, the season of "Raising Kanan" in Season 3. While that's an end of a Power show, it launches a new spinoff that we're about to announce. We have another spinoff coming. We bring "P-Valley" back for its third and final season, one of our biggest hits on the network this year. We've got a couple acquisitions in "Amadeus" and "The Listeners" from Sky that we're pretty excited about. We bring "Fightland" on the air, and "Fightland"'s our first own original. It's a U.K.-based boxing show with 50. I've seen every episode. I think it could be the biggest show the network's had for that audience. Sky is super excited about it. They came on as a co-commission partner. It got great reviews at Content London last week for the rest of the world. We've got three or four shows in development that we've announced that I think could be as good as anything on TV. The pipeline is great. The business is operating really well. The team is really driving top and bottom-line growth. Well on our way to hitting our kind of stated guides of that 20% margin. I feel really good about the path we're on right now. What is the right mix for you of content between, you talked about originals, spinoffs, and kind of franchise IP, books. You have "All Fours" coming to the network. How do you think about that mix of content? If you think about our two demos, we think TAM in the U.S. is around 80 million households. We're sitting around, call it 80, 90 million today. There's a lot of opportunity to grow the business. Each of the pieces of content that we have in development play a certain path to kind of drive us up into that TAM, right? "All Fours," which is a book from Miranda July, that's kind of taken the country by storm in the 40-something female community. The chat rooms are insane. It feels a lot about like the obsessed "Outlander" fans. We think that's going to be a really big hit for us, and it pushes us into a piece of the business that we don't have depth in today. We have a show called "Kingmaker" that we announced, which is a D.C. political show based on the Black elected in D.C. We think that's going to be a real interesting insight into what's going on in America today with the CBC and Speaker Jeffries and all the various different electeds that you see in D.C. today. Again, power centric. It's got both sides of the world. It's soapy, but it's also more politically driven, so that could be really interesting. "Masquerade" is a show that feels different than anything we have. If you think about "The Talented Mr. Ripley," it's loosely based on a Ripley-type character. We've always believed that Ripley, as played by a woman, would be much more devious and sinister, so we'll have a show that's similar to that. We feel good about that. Everything that we have in development really helps us drive up into that 80 million TAM that we don't have today. We feel really good about growth. We do. We feel we can drive this business top line and bottom line for the foreseeable future. Great. We're up on time, so final question that might be the toughest question I ask you. For people in this audience today that don't subscribe to Starz, that maybe they're investors that want to learn about Starz, if you could just say you can only watch one show to see what Starz is all about, what would you tell them to watch? I can't answer that question. I love all. It was a trap. I love all my children equally. Look, if you look at the business today, I think we're super undervalued compared to our peers. We're going to generate a lot of profitable growth and a lot of free cash flow and the underpinnings of the stock, the free cash flow coming as a very investable business, and I think that will continue for the foreseeable future. If you map out where we are today to that 20% margin, I think there's really great EBITDA growth and great free cash flow conversion. As an investor, I think that's a really good place to be right now. That's all I got. All our shows are great. All right. Thanks, Jeff. Thanks, everyone. Thanks for the time. for joining us.