Lionsgate reportedly mulling Epix stake sale to MGM, Viacom

Viacom_CREDIT_André-Pierre du Plessis-Flickr
The possible deal for Epix would value the premium network and its streaming service at around $1 billion to $2 billion. (André-Pierre du Plessis/Flickr)

Lionsgate is reportedly in talks to sell its 31% stake in Epix to co-owners MGM and Viacom’s Paramount.

According to Reuters, the possible deal for Epix would value the premium network and its streaming service at around $1 billion to $2 billion. As the report points out, earlier this month Lionsgate CEO Jon Feltheimer called Epix “a valuable asset” and said that Lionsgate, Viacom and MGM would “realize the value whichever way we all decide is best for our companies.”

The possible sale comes about after Lionsgate recently completed a long-in-the-works acquisition of Starz.

RELATED: Lionsgate-Starz will generate ‘significant cash flow’: analyst

"After planning the integration of Lionsgate and Starz for the past five months, we are more excited than ever at the value created by the combination of our two great companies," said Feltheimer and Vice Chairman Michael Burns in a statement following the completion of the merger. "[Starz CEO] Chris [Albrecht] and his team have built Starz into a strong brand, a world-class distribution platform and a premium programming leader, and we're delighted to welcome them to the Lionsgate family. Working together, we believe that the strategic opportunities are enormous, and we're pleased that our shareholders recognize the transformative potential of the transaction."

At least one analyst, John Janedis from Jefferies, came away from an analyst meeting concerning the merger under the impression that Lionsgate and Starz will be a good match.

“The day highlighted strategies/opportunities for the Starz, Lionsgate Film and Lionsgate TV assets, which combined benefit from diversification, scale, stability and a mitigated risk strategy,” wrote Janedis in a research note. “Together, we expect the company to generate significant cash flow, and reiterate our Buy rating.”

Janedis pointed specifically to the companies’ now more diversified earnings stream. He noted that Starz Networks will account for more than 60% of Lionsgate's combined gross contribution, and that the premium channel’s “stable cash flow [helps] to offset the more volatile film/TV production businesses.”

RELATED: Paramount getting $1B investment from Chinese firms

For Viacom and Paramount, a deal for more consolidated control of Epix would mark the latest strategic move for Viacom following the dissolving of the media company’s aspirations to recombine with CBS.

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