Shares of Lions Gate Entertainment were dropping 7 percent in midday trading Friday as rumors circulated that Comcast will not renew a pact that makes Starz available to its cable-TV subscribers.
Comcast and Lions Gate were unavailable to respond to requests for clarification, and a deal in place now is still four months away from expiring, but investors were punishing the film and TV studio and Starz parent by bidding shares down on more than twice the stock’s normal trading volume.
Earlier Friday, Lions Gate announced a multiyear agreement with AT&T, which will make the Starz and Starz Encore premium linear and HD channels and on-demand content available to subscribers of DirecTV, AT&T TV and U-verse, all of which are owned by the telecom giant. That bit of good news, though, was apparently overshadowed by the prospect of losing Comcast and its 21.6 million TV subscribers.
If a dispute with Comcast is indeed in the cards, it comes at a precarious time, given that Starz is seen as a takeover target. Lions Gate purchased the asset for $4.4 billion just three years ago but Wall Street figures it could be enticed to sell it for a relatively quick profit. The price, though, would need to significantly eclipse the $5 billion that CBS has already offered for Starz, according to insiders.
Lions Gate investors clearly hope the company does something to juice the shares, as they fell 22 percent in 2018 and, with Friday’s losses, are off another 45 percent so far this year, even though the entirety of Lions Gate, the force behind The Hunger Games, Twilight, John Wick and The Expendables is also seen as a takeover target at a time when larger conglomerates are desperate for proven content.
In August, Lions Gate said Starz grew by 2.6 million subscribers year-over-year to 26.5 million worldwide as its over-the-top offering achieved significant growth to a total 4.4 million subs.
