Wall Street and Hollywood have been buzzing about the possibility of a merger between Starz and Lionsgate ever since the companies swapped stock last February, making them, in the words of Starz CEO Chris Albrecht,” kissing cousins.”
Despite coining the incestuously-charged metaphor, the pay chief stressed at the Deutsche Bank media, internet, and telecom conference on Tuesday that the two players are still in the get-to-know-you phase of their courtship. He did acknowledge that a union might ultimately make sense.
“There are a lot of potential conversations for us to have,” said Albrecht, saying that the companies will go to the table asking, “Are there things that we’re doing that we can do better together?”
The stock swap is still subject to regulatory approval. As part of the deal, Starz’s chief investor John Malone is joining Lionsgate’s board of directors, a move that only intensified speculation that the companies might become further entangled. The Starz stock used in the deal was held by Malone and his affiliates.
There is certainly some synergistic appeal to a marriage. Lionsgate offers Starz top-line movies and programming at a time when it’s trying to bulk up its slate of exclusive offerings. The cable channel has nearly doubled the amount of original programming it airs in recent years, fielding shows like the pirate drama “Black Sails” and the bestselling book adaptation “Outlander.”
At the same time, Starz grants Lionsgate entrée to the world of premium cable. With the studio’s hit “Hunger Games” franchise winding down, it needs to find new revenue streams to compensate for the loss of Katniss Everdeen and company.
“They’re at a point, like Starz, where it’s time to think about what’s next,” said Albrecht.
Despite the fact that Starz and Lionsgate are growing more closely aligned, Albrecht argued that mergers can’t be taken lightly.
“It’s hard putting companies together,” he said. “There has to be really good reasons. You have to think these things through… The conversations we have with Lionsgate will cast some light on what the extent of the relationship can or should be.”