It appears Lionsgate Entertainment is officially considering whether or not to let go of its pay-TV and streaming business (Starz), separating it entirely from its studio operations. Thursday last week we saw them complete a regulatory filing tied to their Q3 earnings regarding the separation, yet they don’t seem to have a buyer in mind- openly, at least. We reached out to a well-known entertainment lawyer with Blake and Wang P.A for more details.
The decision was officially put to the board on Nov 2nd, 2021, and authorization to ‘explore potential capital markets alternatives’ was granted. The reasoning? It seems they would like to ‘unlock significant shareholder value’ by focusing on the two entities separately. This does seem fairly contrary to the ‘operational benefits’ we were told would be seen from their close partnership just a few years ago. Apparently, the envisioned separation will not affect this synergistic relationship, however, although it’s also currently not entirely clear how this is expected to happen in capital terms.
Perhaps much closer to the truth, it’s also been cited that they’re not receiving equity value from the investment they’ve plowed into Starz, especially on the international front. Lionsgate acquired Starz 5 years ago, paying $4.4B at the time. Currently, Starz is set up as a pay-TV channel (as we once saw with HBO) but there is an attempt underway to increase their streaming market share, as with so many other operators currently.
While it’s clear this deal is in its early stages, and it would appear there is no buyer in mind, the situation will be worth monitoring as it progresses. It’s unusual, in what’s becoming acknowledged as the era of streaming, to see a company so keen to lose its streaming asset, so Brandon Blake and the team will be interested to see how this develops further.
Film and Television 