Lionsgate to buy Starz for $4.4bn

Jun 30, 2016, 3:19 PM EDT
(Source: alexanderaustin79/flickr)
(Source: alexanderaustin79/flickr)

Lionsgate will buy pay-per-view channel Starz for $4.4 billion.

Reuters reports:

Lions Gate Entertainment Corp (LGF.N), the film studio behind the Hunger Games movies, said Thursday it would buy premium television network Starz (STRZA.O) for $4.4 billion in cash and stock, in a deal that would unite two media companies with ties to cable mogul John Malone. Both companies held on and off talks for some time. The long-anticipated deal will help diversify Lionsgate's business and make its financials less dependent on whether it can deliver a hit movie, according to Jefferies analyst John Janedis. Lionsgate Chief Executive Jon Feltheimer said on a conference call that the deal creates a "global content powerhouse that invests nearly $2 billion a year in new content." Starz, which competes with HBO and Showtime, also develops original programing such as the fantasy series "Outlander." Lionsgate's bet on a cable network comes with risks, however, as more viewers watch television online and buy fewer cable subscriptions.

USA Today notes:

Lionsgate’s TV unit has produced several hits in recent years, including Mad Men, Orange Is the New Black and Nurse Jackie, and is eager to expand distribution as viewers' demand for premium TV content grows and more options are available for streaming video. Amid stiff competition, Starz would work with Lionsgate to broaden streaming and other viewing options for subscribers. Netflix and Amazon also have invested more in their premium TV production businesses in recent years for their streaming services. After the acquisition, the combined company will own 16,000 titles in its film and television library and operate or have investment in 30 "channel platforms" around the world, Lionsgate said. The flagship Starz channel has 24 million U.S. subscribers, while Starz Encore has 32 million subscribers.

The New York Times writes:

Starz’s resurgence has been led by Chris Albrecht, the former chief executive of HBO. In a call with reporters on Thursday morning, Lionsgate’s chief executive, Jon Feltheimer, suggested that Mr. Albrecht would retain an important role in the combined company. “We expect Chris not only to continue to run Starz, but also to have a major participation and leadership of the entire combined company,” he said. Earlier this week, Starz announced that Mr. Albrecht had renewed his contract to remain as chief executive through 2020. The terms of the Lionsgate-Starz deal are complex. Lionsgate will first change its stock, with each share splitting into half of a voting share and half of a nonvoting share.