Lionsgate vice chairman Michael Burns updated Wall Street analysts on Wednesday about current talks with multiple bidders on a possible transaction involving Starz as well as the entire company.
“I can tell you the deeper we’ve gotten into this over the last few months, the more we’re convinced this is the right thing to do,” Burns told the Bank of America 2022 Media, Communications and Entertainment Conference, during a session that was webcast.
Lionsgate has been exploring its options for Starz, including a possible separation of the pay TV and streaming business and its studio operations. The goal appears to be creating two standalone companies so investors can value the Starz and studio assets separately.
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Burns insisted his studio would not do a speedy or careless deal. “We’re not going to do a dumb deal on one or both sides of the business. But we’re very encouraged with our potential partners, which in some cases are world renowned, smart money and also smart strategically,” he reported.
Burns reiterated Lionsgate was not receiving from investors sufficient value for both of its core assets, the film and TV studio and Starz. And he explained why Lionsgate was considering a spin-off of Starz as rival studios were vertically integrating their TV assets for scale.
“When we do separate these businesses, we want to ensure an interlocking synergy, a relationship between the studio and Starz. All of those things are either set in place, or in the process of being set in place,” Burns added.
“So yes, in many cases we’ll be ‘separated.’ But in many instances we will be very much together,” he argued.
Jeffrey Hirsch, president and CEO of Starz, agreed there would be continued consolidation between the studio and the premium TV platform, whatever possible dealmaking occurred.
“What that looks like, it’s up in the air. But when you look at both sides of our business, Michael and Jon [Feltheimer] have done a phenomenal job of building a 17,000 title library studio, which is hard to replicate today when you need content … And then on the Starz side as you separate, it gives us a currency to focus on what we do and do well, and that’s either to become part of something bigger or actually get bigger, very quickly,” Hirsch told the investors conference.
Burns also told analysts that Lionsgate wanted to preserve tax write-offs as any transaction potentially involved the Hollywood studio headquartered in Canada, beyond Starz on its own. Potential suitors appear to either see Starz as a streaming platform, while others after Amazon’s purchase of MGM are looking at Lionsgate and its programming library as a possible indie studio acquisition.
Lionsgate has said it would unveil its decision in September as it weighed strategic initiatives, mindful that Wall Street analysts and investors are keen to see a resolution as current talks with potential dealmakers continue.
Starz is a pay TV channel similar to HBO and Showtime, and also offers a streaming service aimed at domestic and international audiences. Its programming includes the Power franchise, Blindspotting and Hightown. Lionsgate acquired Starz in 2016 for $4.4 billion.
