The long-rumored merger between Lionsgate and Starz has finally come to fruition, with the Canadian-American movie studio buying the premium cable network for a cash and stock sum totaling $4.4 billion.
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.
For Starz, the second biggest premium cable network, ranking between HBO and Showtime, the marriage ties it to one of the most prolific programming sources in television.
Lionsgate, meanwhile, has emerged as programming force in the cable arena in recent years, and it now has its own major platform to ambitiously launch more original series around the globe.
"Today's acquisition of Starz will help Lionsgate diversify its revenue and earnings stream; the more stable and consistent earnings profile of Starz, as a premium cable network, will help offset the lumpy and hit driven nature of Lionsgate, as a pure play content company," said Jefferies analyst John Janedis.
The deal also further feathers the nest of Liberty Media mogul John 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.
"This transaction unites two companies with strong brands, complementary assets and leading positions within our industry," said Lionsgate CEO Jon Feltheimer and vice chairman Michael Burns, in a statement. "We expect the acquisition to be highly accretive, generate significant synergies and create a whole that is greater than the sum of its parts."
The deal was notably announced just two days after news hit that Starz CEO Chris Albrecht's contract has been re-upped to 2020. Albrecht, who made HBO the force it is today by establishing the network's original-series portfolio, has been doing the same for Starz.
"Chris Albrecht and his team have built a world-class platform and programming leader, and we're proud to marshal our resources in a deal that accelerates our growth and diversification, generates exciting new strategic content opportunities and creates significant value for our shareholders," the Feltheimer/Burns statement added.
Yet to be sorted out is Lionsgate's relationship with Epix. The studio owns a third of the rival premium cable channel, along with Viacom's Paramount Pictures unit and Metro Goldwyn Mayer. Lionsgate also has an exclusive pay-cable output deal with Epix for its movies.
A Lionsgate spokesperson told Variety that, at least in the short term, not much will change regarding Epix. For Starz's part, movies aren't a huge part of the equation, anyway. The channel only has one movie studio, Sony Pictures, tied to a premium cable output deal.
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