Starz is reportedly back in merger talks with Lionsgate, with the two John Malone-backed media companies continuing to seek bulk and scale amid a consolidating pay-TV market.
According to multiple media reports, Starz has had numerous merger discussions over the past 18 months with various other media companies -- AMC Networks, 21st Century Fox, just to name a few. In fact, Starz and Lionsgate have already had merger discussions in this time span, with the sides failing to come together on the issue of valuation.
Speaking to anonymous sources, the Los Angeles Times describes the latest dalliance as "advanced." Starz rep Eric Becker told FierceCable that his company doesn't comment about "rumors and speculation." Lionsgate did not immediately respond to requests for comment.
Both Lionsgate and Starz, a premium cable programmer that competes with the larger HBO and Showtime, receive backing from Liberty Media chief John Malone. He has previously expressed a desire to see the "free radicals" of the media business -- mid-size, independently operating companies like Starz and Lionsgate -- come together.
Starz, which touts around 24 million subscribers, would add a prolific content engine to Lionsgate, which not only produces hit feature films like The Hunger Games franchise but also successful TV programming such as Netflix's Orange Is the New Black and AMC's recently concluded Mad Men.
As for hurdles to the deal, the two companies would have to overcome the valuation issue -- currently, Lionsgate has a market capitalization of $5.81 billion, while Starz is valued at $3.97 billion.
There's also Lionsgate's entanglement with Starz competitor Epix to consider. The studio is a 1/3 partner with Viacom's Paramount Pictures division and Metro Goldwyn Mayer on the premium network. And Lionsgate couldn't easily merge Epix's operations with Starz in the event of a successful merger.
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