Starz Plans to Speak to Potential Buyers Early Next Year (Report)
NEW YORK - Starz plans to start holding talks with possible buyers early next year after its separation from Liberty Media, the Wall Street Journal reported, citing a person familiar with the situation.
When Liberty announced this summer that Starz would become a separate company, analysts immediately suggested that entertainment conglomerates would look at acquiring it down the line. But most predicted Starz would operate as a standalone company for a while before looking at possible buyers.
STORY: Analysts: Liberty Media's Starz Spin-Off Opens Up Deal Possibilities
ISI Media analyst Vijay Jayant said back then that the spin-off will enable Starz to operate independently and "eventually merge with an entertainment conglomerate with studio operations."
Barclays Capital analyst James Ratcliffe similarly said: "Starz would be more valuable as part of a larger portfolio of cable network assets (due to economies of scale and greater leverage with distributors)."
Analysts have mentioned all entertainment conglomerates as possible buyers, but particularly those that have a studio and other cable networks, but don't own a premium TV service yet, such as Comcast-controlled NBCUniversal. That company's Universal Pictures studio also has an output deal with Time Warner's HBO that expires in 2016 and could be moved to Starz.
Tax rules don't allow for talks with potential buyers before the separation from Liberty, which analysts predict will be completed by mid to late January. A Starz spokeswoman declined to comment.
The Journal said the accelerated plans for talks with possible acquirors were one of the reasons why Starz didn't bid more aggressively against Netflix in the bidding for Walt Disney films, which Netflix won earlier this week. But one source said Starz, led by CEO Chris Albrecht, also wasn't willing to pay as much as Netflix as Starz has been expanding its original programming strategy. It is believed that Netflix is paying Disney $300 million per year, up from Starz's current $200 million per-year deal with Disney that runs through 2016.
One Wall Street observer said that an entertainment conglomerate that acquires Starz would likely want it continue with the push into originals and could provide additional capital for it.
Liberty CEO Greg Maffei said this year that a bigger Hollywood player "might be able to do more with [Starz] than we have."
BTIG analyst Richard Greenfield told the Journal though that the end of the Disney film deal in a few years could make a sale of Starz harder until it shows more original hits. "It doesn't make any sense why you would buy something without great content," it quoted him as saying.