Analyst Sees Potential for Spin-Off of Liberty Starz

Chris Albrecht - 15th Annual Hollywood Film Awards Gala Presented By Starz - P - 2011
John Shearer/Getty Images

BTIG's Richard Greenfield says a separation of the premium TV company from John Malone's Liberty Media would "enable it to be acquired mid-late next year by a larger media entity."

NEW YORK - Could John Malone's Liberty Media be looking at a full spin-off of premium TV network firm Liberty Starz?

BTIG analyst Richard Greenfield thinks so. In a blog post he argued that this is a likely scenario following Wall Street chatter about a potential credit line for Starz.

"While it is conceivable that Liberty Starz is raising capital to pursue an acquisition, we do not see many compelling targets," Greenfield wrote.

"Furthermore, we believe Starz is far more likely to be acquired than to be a buyer of other assets management has repeatedly indicated that Starz probably makes more sense as part of a larger media conglomerate."

His conclusion: "The more likely scenario is that Liberty is preparing to hard-spin Liberty Starz out of Liberty Media, to enable it to be acquired mid-late next year by a larger media entity." The analyst, for one, has in the past argued that Comcast/NBCUniversal and Time Warner would be logical buyers.

Officials at Starz, led by CEO Chris Albrecht, and Liberty Media couldn't be reached or declined to comment.

Liberty Starz is currently a tracking stock of Liberty Media, meaning investors can trade shares focused on the Starz business, even though it is for now part of Liberty Media. A spin would make it a separate and fully independent, asset-based stock.

What caused Greenfield's blog past was news that he said surfaced out of Standard & Poor’s late this week that indicated that Liberty Starz was in the process of financing a five-year $1.5 billion credit line.

Management of Liberty Media and Starz declined comment.

"We find it hard to believe that Liberty/Starz would not have outright denied if the story was blatantly false," Greenfield said.

A spin-off of Starz would also have benefits for the company's Liberty Capital business, its collection of investments in the likes of Sirius XM and Live Nation, according to the analyst. Liberty Capital "by virtue of Liberty Starz no longer being part of the company also becomes an asset backed company, flush with cash to either aggressively shrink the equity float and/or strategic acquisitions."


Twitter: @georgszalai