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Lionsgate is officially 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 Lionsgate’s quarterly earnings, the 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.
“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,” Lionsgate vice chairman Michael Burns said on the company’s earnings call. “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.
Starz is a pay TV channel similar to HBO and Showtime, and also offers a streaming service. Its programming includes the Power franchise, Blindspotting and Hightown.
Lionsgate acquired Starz in 2016 for $4.4 billion.
The filing suggests that the company is in the early stages of the process, and Burns said that “the timing would depend on what path we choose; that is an open question.”
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