Roku and private equity firm Apollo Global Management are reportedly working together on a joint bid for a stake in Lionsgate’s premium linear and streaming channel and Starz.
The Wall Street Journal first reported the news.
The partners could be looking to acquire up to a 20% stake in Starz but aren’t seeing eye to eye on valuation with Lionsgate, according to the WSJ report, citing unnamed sources familiar with the matter. Lionsgate acquired Starz in 2016 for $4.4 billion.
Roku and Apollo don't appear to be the only interested parties vying for Starz, a premium cable and streaming channel, according to Variety, which reported that others are also circling the wagon.
Spokespeople for Lionsgate and Roku declined to comment. Apollo didn’t immediately respond to inquiry from Fierce Video.
In 2021, Roku was seen as a potential buyer for Starz this year, which could pick up the studio to bolster its content library, create more originals and increase its share in the streaming video market.
Lionsgate for its part would raise cash and place a value on Starz by selling a stake, WSJ reported.
The Roku Channel, which helps drive advertising revenue within the company’s platform business, launched in 2017 and now reaches 80 million people. It counts 75 Roku originals since launching that effort last year. Just last month Roku signed a multiyear theatrical output deal to exclusively stream Lionsgate’s films on the Roku Channel after they initially premiere on Starz.
In February, Lionsgate reported adding 1.7 million Starz subscribers, with its global streaming subscriptions rising 44% year over year to 19.7 million.
In November Lionsgate said its board of directors had given management the go-ahead to explore selling or spinning off its Starz division.
“While we continue to realize substantial synergies from bringing Lionsgate and Starz together, we also see the opportunity to potentially unlock significant shareholder value under a scenario where investors have the ability to value our studio assets and Starz separately,” said Michael Burns, Lionsgate vice chairman on the company’s earnings call last fall.
He also pointed to recent deals in the media space as giving “us confidence that exploring alternate paths is prudent.”
This year in February, Burns provided an update on a potential Starz sale saying, “we are working with a terrific team of advisors with complementary strength and expertise as we continue the process of unlocking the shareholder value within our two core businesses.”
“We will be providing additional updates on our progress at the appropriate time,” Burns said during Lionsgate’s fiscal year 2022 third quarter earnings call.