Annual report pursuant to Section 13 and 15(d)

Information about Operating Segments

v2.4.1.9
Information about Operating Segments
 12 Months Ended
Dec. 31, 2014
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 (excluding stock compensation expense), production and acquisition costs, home video cost of sales, operating expenses (excluding stock compensation expense) and selling, general and administrative expenses (excluding stock compensation expense). Starz’s chief operating decision maker uses this measure of performance in conjunction with other measures to evaluate the operating segments’ 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 three operating segments, Starz Animation is also reported.

Performance Measures (in millions):
 
For the Years Ended December 31,
 
2014
 
2013
 
2012
Revenue:
 
 
 
 
 
Starz Networks
$
1,312.0

 
$
1,297.7

 
$
1,276.8

Starz Distribution
321.5

 
449.5

 
320.6

Starz Animation
31.7

 
32.5

 
42.5

Inter-segment eliminations
(1.3
)
 
(2.2
)
 
(9.2
)
Total Revenue
$
1,663.9

 
$
1,777.5

 
$
1,630.7

 
 
 
 
 
 
Adjusted OIBDA:
 
 
 
 
 
Starz Networks
$
496.4

 
$
456.2

 
$
447.4

Starz Distribution
7.5

 
24.0

 
(5.0
)
Starz Animation
(2.7
)
 
(2.6
)
 
(0.9
)
Inter-segment eliminations
0.5

 
(0.7
)
 
3.3

Total Adjusted OIBDA
$
501.7

 
$
476.9

 
$
444.8


Other Information (in millions):
 
For the Years Ended December 31,
 
2014
 
2013
 
2012
Cash paid for investment in films and television programs:
 
 
 
 
 
Starz Networks
$
227.9

 
$
125.2

 
$
161.1

Starz Distribution
161.6

 
177.3

 
109.0

Starz Animation
—

 
—

 
—

Inter-segment eliminations
—

 
—

 
—

Total cash paid for investment in films and television programs
$
389.5

 
$
302.5

 
$
270.1

 
 
 
 
 
 
 
December 31,
 
 
 
2014
 
2013
 
 
Total assets:
 
 
 
 
 
Starz Networks
$
1,357.4

 
$
1,197.7

 
 
Starz Distribution
174.1

 
188.8

 
 
Starz Animation
2.4

 
2.8

 
 
Other unallocated assets (primarily cash, deferred taxes and other assets, including income tax receivables and capital lease with LPH)
101.9

 
99.2

 
 
Inter-segment eliminations
(62.6
)
 
(38.5
)
 
 
Total assets
$
1,573.2

 
$
1,450.0

 
 


    
The following table provides a reconciliation of Adjusted OIBDA to income before income taxes (in millions):
 
For the Years Ended December 31,
 
2014
 
2013
 
2012
Consolidated Adjusted OIBDA
$
501.7

 
$
476.9

 
$
444.8

Stock compensation
(30.6
)
 
(34.3
)
 
(20.0
)
Depreciation and amortization
(19.4
)
 
(17.4
)
 
(19.4
)
Interest expense, net of amounts capitalized
(46.5
)
 
(45.0
)
 
(25.7
)
Other income, net
4.6

 
9.0

 
3.0

Income before income taxes
$
409.8

 
$
389.2

 
$
382.7