October 8, 2019
Lionsgate is reportedly considering spinning off or selling its Starz subsidiary.
Lionsgate, which acquired Starz in 2016 for $4 billion, is looking to leverage the pay-TV and $8.99 monthly over-the-top video subsidiary in an era of burgeoning streaming video, according to The Wall Street Journal, which cited sources familiar with the situation.
Specifically, the Santa Monica, Calif.-based studio/distributor is following the corporate playbook Viacom pursued in 2004 when it spun off its controlling stake in Blockbuster Video for a $1.3 billion impairment charge.
Lionsgate reported about $2.9 billion in debt at the end of the most-recent fiscal period. The company could offload the debt through a special-purpose acquisition vehicle — a public company created to acquire a specific asset.
Earlier this year, CBS reportedly offered $5 billion for Starz, which Lionsgate considered too low. Two years ago, Hasbro looked to acquire Starz but negotiations ended without a deal.
Lionsgate also has other reasons to consider offloading Starz. With pay-TV operators looking to rework carriage agreements with content holders, DirecTV reduced the amount it pays Lionsgate to carry Starz and Starz Encore.
Now Comcast is reportedly looking to drop Starz when its carriage deal expires at the end of the year. Loss of the nation’s No. 1 cable operator could result in Starz losing millions of subscribers, or more than $225 million in annual revenue.