Starz CEO Predicts Much More Media Consolidation

Starz CEO Chris Albrecht reiterated his belief in “the value of consolidation” on Tuesday, but didn’t shed much light on what’s going on with discussions to merge Starz with Lionsgate, two companies where John Malone is heavily invested.

“Consolidation is going to happen,” Albrecht said at the Morgan Stanley Technology, Media & Telecom Conference in San Francisco.

Entertainment has been too homogenized for the past several decades, creating an environment ripe for mergers and acquisitions, he said.

Starz and Lionsgate have each seen their shares fall lately, which complicate merger discussions, according to Wall Street analysts.

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“Luckily we have a very large investor who is very supportive,” Albrecht said of Malone.

Lionsgate said a month ago that it intends to discuss with Starz “potential combinations that may involve stock or a combination of stock and cash.”

Earlier at the same conference, Greg Maffei, CEO of Liberty Media, which spun off Starz three years ago, also addressed mergers and acquisitions in the entertainment industry.

“Consolidation will happen slowly,” he said.

“In a lot of cases it’s either management structures or ownership structures which are reluctant to combine. They like where their current situation is,” said Maffei. “They may dream or wish for consolidation but don’t wish for change in management or ownership structure, so I think that is an impediment. But I do think there is a lot of value to be created through that kind of consolidation.”

Liberty has cash to spend, since last week it settled an old lawsuit with Vivendi for $775 million, or about $420 million after tax. Maffei joked that Liberty isn’t used to paying so much in taxes for the deals it does. “Shame on us,” he quipped.

But he said the money will come in handy if prices come down more for media companies, shares of which have been under pressure as Wall Street frets about the consequences of cord-cutting, skinny bundles and competition from Internet streaming.

“Cash has more utility now than it had even six months ago,” Maffei said.