Ahead of its separation from parent Lionsgate, premium network and streaming service provider Starz plans to reduce its staff of 670 employees by more than 10%.
News of the layoffs came in a memo sent to staffers by Starz CEO Jeffrey Hirsch on Friday, followed by a company-wide town hall meeting.
“As difficult as it is, with many of our employees being impacted, we are making these changes to align our organization with the growth areas of the business and to prepare us for our next chapter as a standalone company,” said Hirsch in the memo, obtained by CNBC.
Starz will also end business operations in the U.K. and Australia, following its recent exit from Latin America. The departures were announced in Lionsgate’s August earnings call — Lionsgate Entertainment CEO Jon Feltheimer called it a “move towards focusing the service on the U.S., the UK, Canada and Australia.”
Departing the U.K. will scale down Starz’s operations and prepare it for a potential merger with another U.S. media asset.
Lionsgate acquired Starz in 2016, when TMT titan John Malone's Liberty Media sold the media venture to the Canadian “mini-major” for $4.4 billion in assets and stock.
Of course, it didn’t take Lionsgate long to figure out that pay TV distribution is hard right now and building streaming scale might be even harder. In May of 2022, it announced that it would spin off Starz, hoping to cull greater value from the asset.
Scheduled to depart from Lionsgate in September of this year, the divestment of Starz was delayed due to Lionsgate’s $500 million acquisition of Hasbro’s eOne and this year’s Hollywood guild strikes.
Lionsgate itself, meanwhile, quietly cut nearly 10% of its workforce, nearly 150 full-time employees at the beginning of 2023 as part of a $43 million deal to sell a partial interest in StarzPlay Arabia. Lionsgate now plans to divest Starz sometime in 2024.
“What has been instrumental to our successful transition from a linear-only business into the new digital world has been our laser focus on the changing environment, anticipating what lies ahead and adapting the organization to succeed in this disruptive environment,” Hirsch said in his memo. “It’s why we continue to stand out as one of the only profitable premium networks.”
But Starz doesn’t have anywhere near the market value it had back in 2016. So Lionsgate has been cutting overhead to try to make the asset more attractive to buyers.
In September, Starz went on a bit of a programming purge.
Wrestling drama Heels, comedy Run the World and dramedy Blindspotting all found themselves on the chopping block. Also cut was The Venery of Samantha Bird, which had yet to finish production on its first season.
Dropping four series in quick succession wasn't a small move for Starz, which doesn't have much in the way of scale.
Starz ended last quarter with 12 million domestic streaming subscribers and about 20 million total customers, including those who pay for traditional pay TV. The company typically focuses on female and Black audiences with series like Black Mafia Family and P-Valley.
Lionsgate shares rose 7% on Friday. The company is set to report its third-quarter earnings Thursday.
Lionsgate will report its fiscal second-quarter earnings on November 9.
