After acquiring a measure of control of Lionsgate through the major studio's purchase of premium cable network Starz Thursday, John Malone will keep looking for deals for media companies in need of scale amid a consolidating pay-TV business, analysts say.
Speculation on Malone's next media target includes a broad assortment of top media companies.
"The most optimistic read of the deal is that it brings Lionsgate one step closer to being the vehicle for a rollup of a much larger content company, such as a Discovery or CBS, per some of John Malone's comments last year," Doug Creutz, a Cowen & Co. analyst, said Thursday in a note to investors.
Other media companies entering the realm of the Malone speculation include AMC Networks, Scripps Networks Interactive and embattled Viacom.
Malone has called these companies "free radicals" — those that don't have enough scale on their own to compete long-term in a media landscape featuring declining audience and ad rates, as well as consolidated power among pay-TV operators.
"Having all those businesses together allows you to leverage them off each other, save money on the cost side, create the content," FBN Securities analyst Robert Routh said to Bloomberg. Fitting into a bigger conglomerate is "a safe place to be for a lot of these entities that aren't big enough."
Routh described the ideal consolidated model as Time Warner Inc., which owns the Warner Bros. film and TV studio, the premium channel HBO, and basic cable networks including CNN, TNT and TBS.
"Even Disney is small in market cap when you compare it with Apple or Facebook," Malone said to CNBC last year. "Traditional media companies are looking pretty small. You could argue there's going to be some combinations."
On Thursday, Lionsgate announced that it's paying $4.4 billion in cash and stock to acquire Starz. Lionsgate, producer of top Starz original series including Outlander and Power, will integrate a collection of 17 Starz- and Encore-branded pay cable networks. Also included under the Starz umbrella is Anchor Bay Entertainment, a home video label that counts Weinstein Co. among its clients.
The deal also further feathers the nest of Liberty Media mogul Malone, who is the majority shareholder in Starz and also, through personal holdings, owns a piece of Lionsgate. Malone's voting and non-voting influence in the now-major studio will grow considerably.
- read this Bloomberg story
Lionsgate buys Starz for $4.4B, as Malone gets bigger chunk of movie studio
Malone quietly escapes conditions amid FCC's Charter-TWC approval order
Starz moving 'beyond the traditional cable bundle,' will announce partners in coming weeks