5 NOV 2021

Lionsgate is exploring spinning off or selling its Starz business

Lionsgate is exploring its options for Starz, considering a separation of the pay TV and streaming business and its studio operations.

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Lionsgate is exploring its options for Starz, considering a separation of the pay TV and streaming business and its studio operations. According to a regulatory filing Thursday tied to its quarterly earnings, the Lionsgate board made the decision this week.

“On November 2, 2021, the company’s Board of Directors authorized the company’s management team to explore potential capital markets alternatives for its Media Networks business (Starz) including, but not limited to, a full or partial spin-off, split-off, issuance of a tracking stock or other transactions,”  the filing said.

During the Lionsgate’s earnings call, Michael Burns, Vice-Chairman of the company, also referred to the issue: “While we continue to realize substantial synergies from bringing Lionsgate and Starz together, we also see the opportunity to potentially unlock significant shareholder value under a scenario where investors have the ability to value our studio assets and Starz separately. Recent transaction multiples in the media space give us confidence that exploring alternate paths is prudent. Additionally, we believe that a number of the structures we’re considering would allow Lionsgate and Starz to preserve many of the operational benefits we’re currently achieving within a single corporate structure”.

“Even though we don’t normally talk about equity value, it is pretty clear to us that we are not getting the value for some of our parts,”  he added, in particular noting its international businesses and investments. Lionsgate acquired Starz in 2016 for $4.4 billion.

During its Q3 earnings calls, Lionsgate announced that its revenue was down from last quarter, when the company reported more than $900 million. Its Starz-branded streaming service Starzplay now has 18 million subscribers (up from the 16.7 million last quarter), more than half of the overall Starz subs of 30 million.