Stock in Lionsgate, Starz Surges as Merger Speculation Resumes

'The Hunger Games'

A tie-up between 'The Hunger Games' studio and the premium cable channel operator has been an on-again, off-again possibility for years.

Stock in Lionsgate and Starz jumped sharply Thursday after a report that merger talks between the studio and the premium cable channel operator were back on.

The Street reported that Lionsgate had approached Starz about a tie-up four months after curbs on U.S. companies taking a foreign address to reduce their tax bill appeared to thwart John Malone's media mashup involving The Hunger Games studio.

Shares in Starz were up $1.90, or 7 percent, to $29.70, while Lionsgate stock rose 46 cents, or just over 2 percent, to $21.02, on Thursday on news of the resumed approach. A Lionsgate spokesperson had no comment on the media report, while Starz did not respond to a request for comment.

Lionsgate, which has a Canadian domicile, earlier confirmed negotiations with Starz as Liberty Media's Malone, who has a controlling stake in Starz, eyes a cross-border merger to avoid the U.S. tax net. A merger of Lionsgate and Starz is not thought to be imminent.

Such a tie-up, however, has been an on-again, off-again possibility for years, as Malone is a major investor in both companies. Analysts have been predicting consolidation in the industry under the assumption that companies will need more scale to deal with challenges like cord-cutting and skinny bundles.

Recent acquisitions include Comcast's NBCUniversal acquiring DreamWorks Animation and Rovi buying TiVo.