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Starz, set to merge with Lionsgate via a $4.4 billion deal, on Thursday posted sharply lower third quarter earnings, despite higher revenues.
“Hopefully we won’t be talking again,” Starz CEO Chris Albrecht told analysts as he said the premium cable network was on track to complete its merger with Lionsgate by the end of the year as market watchers weigh that smaller studio deal against AT&T’s own $85 billion run at Time Warner.
Albrecht during a conference call with analysts touted the marriage of AT&T and Time Warner as good for all content creators and distributors. “These things (mergers) are extremely difficult, but there’s no one smarter than (Time Warner chairman and CEO) Jeff Bewkes. He will be a major factor there,” he answered when asked about the impact of the bigger merger on Starz.
“So we’re excited about it, from the point of view that it highlights the value of content, and companies that create their own content, and have the platforms to distributor their own content. Starz is right there,” Albrecht insisted. Lionsgate and Starz, both of which are in John Malone’s investment universe, earlier agreed to a merger in response to the same rapidly-shifting media landscape that led AT&T and Time Warner to agree on their own proposed combination.
While Starz is set to merge with Lionsgate, Albrecht told analysts his company will still be an independent company, “capable of partnering and making unique kind of deals to broaden the company and monetize the content.”
Starz on Thursday recorded net income of $34.3 million, compared to a year-earlier $59.5 million, on overall revenue up 1 percent to $407.8 million. Starz revenue exceeded street forecasts, but earnings at 34 cents per-share were well off a Yahoo Finance consensus estimate of 52 cents.
Revenue at Starz Networks rose 6 percent to $348.6 million, the largest increase since the second quarter of 2013, while revenue at Starz Distribution fell 7 percent to $70 million. The Starz network added 300,000 subscribers during the latest financial quarter, bringing its customer base to 24.5 million. The combined Starz and Starz Encore subscriptions stands at 56 million.
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