Lionsgate considers spinoff of Starz

Starz airs original series including "Outlander" and "Power." (Starz)

Lionsgate is considering plans to turn premium channels Starz and Encore into a separate company that could shoulder some of the studio’s debt load.

According to the Wall Street Journal, Lionsgate is looking at a sale, spinoff or special-purpose acquisition vehicle. The last scenario would entail a new public company buying Starz and then commencing a new public offering. The report said a “significant portion” of Lionsgate’s $2.9 billion in debt would be transferred to the new company.

Variety today confirmed Lionsgate’s potential plans for a Starz spinoff.

Starz and Encore are facing some uncertainty with its pay TV distribution partners. Lionsgate reached a new deal with AT&T to provide the full lineup of Starz and Starz Encore linear channels, on-demand content and online services to customers of AT&T’s DirecTV, AT&T TV and U-verse video platforms. But as the Journal points out, Lionsgate is receiving less from AT&T after the renegotiation.

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Starz and Encore are also staring down the possibility of being dropped from Comcast at the end of the year. The Journal estimated the size of Starz’s Comcast contract to be $225 million.

Last month, Starz officially named Jeffrey Hirsch CEO. The former COO had been running the network since former CEO Chris Albrecht left in March 2019. According to the Journal, Hirsch would likely remain as CEO if Starz is split off from Lionsgate.

Lionsgate acquired Starz in 2016 for $4.4 billion.