Quarterly report pursuant to Section 13 or 15(d)

Information about Operating Segments

v2.4.0.6
Information about Operating Segments
 3 Months Ended
Mar. 31, 2013
Segment Reporting [Abstract]  
Information about Operating Segments
Information about Operating Segments

Starz is primarily engaged in video programming and development, production, acquisition and distribution of entertainment content. Starz evaluates performance and makes decisions about allocating resources to its operating segments based on financial measures such as Adjusted OIBDA. Adjusted OIBDA is defined as: revenue less programming costs, production and acquisition costs, home video cost of sales, operating expenses and selling, general and administrative expenses. Starz’s chief operating decision maker uses this measure of performance in conjunction with other measures to evaluate the operating segment’s performance and make decisions about allocating resources among the operating segments. Starz believes Adjusted OIBDA is an important indicator of the operational strength and performance of its operating segments, including each operating segment’s ability to assist Starz in servicing its debt and to fund investments in films and television programs. In addition, this measure allows management to view operating results and perform analytical comparisons and benchmarking between operating segments and identify strategies to improve performance. This measure of performance excludes stock compensation and depreciation and amortization that are included in the measurement of operating income pursuant to GAAP. Accordingly, Adjusted OIBDA should be considered in addition to, but not as a substitute for, operating income, income before income taxes, net income, net cash provided by operating activities and other measures of financial performance prepared in accordance with GAAP. Starz generally accounts for intersegment sales and transfers as if the sales or transfers were to third parties, that is, at current prices.

Starz’s reportable segments are strategic business units that offer different services. They are managed separately because each segment requires different technologies, content delivery methods and marketing strategies. Starz identifies its reportable segments as those operating segments that represent 10% or more of its consolidated annual revenue, annual Adjusted OIBDA or total assets. Starz Networks and Starz Distribution have been identified as reportable segments; however, as Starz has only three operating segments, Starz Animation is also reported.

Performance Measures (in thousands):

 
Three Months Ended March 31,
 
2013
 
2012
Revenue:
 
 
 
Starz Networks
$
315,836

 
$
324,200

Starz Distribution
76,242

 
72,384

Starz Animation
7,469

 
11,336

Inter-segment eliminations
(230
)
 
(2,956
)
Total Revenue
$
399,317

 
$
404,964

 
 
 
 
Adjusted OIBDA:
 
 
 
Starz Networks
$
114,382

 
$
115,876

Starz Distribution
2,589

 
9,137

Starz Animation
(561)

 
37

Inter-segment eliminations
120

 
1,790

Total Adjusted OIBDA
$
116,530

 
$
126,840











Other Information (in thousands):

 
Three Months Ended March 31,
 
2013
 
2012
Cash paid for investment in films and television programs:
 
 
 
Starz Networks
$
33,610

 
$
27,695

Starz Distribution
24,400

 
34,943

Starz Animation
—

 
—

Inter-segment eliminations
—

 
—

Total cash paid for investment in films and television programs
$
58,010

 
$
62,638

 
 
 
 
 
March 31,
 
December 31,
 
2013
 
2012
Total assets:
 
 
 
Starz Networks
$
1,345,994

 
$
2,066,961

Starz Distribution
129,804

 
118,134

Starz Animation
2,529

 
3,225

Other unallocated assets (primarily cash, deferred taxes and other assets, including the Commercial Lease with LPH)
83,044

 
33,850

Inter-segment eliminations
(49,070
)
 
(46,120
)
Total assets
$
1,512,301

 
$
2,176,050



The following table provides a reconciliation of Adjusted OIBDA to income before income taxes (in thousands):

 
Three Months Ended March 31,
 
2013
 
2012
Consolidated Adjusted OIBDA
$
116,530

 
$
126,840

Stock compensation
(7,254
)
 
(2,582
)
Depreciation and amortization
(4,416
)
 
(4,255
)
Interest expense, net of amounts capitalized
(10,228
)
 
(4,881
)
Other income (expense), net
(1,485
)
 
4,265

Income before income taxes
$
93,147

 
$
119,387