×
You will be redirected back to your article in seconds

Lionsgate, Starz Insiders Throw Ice on Merger Report

It’s starting to feel inevitable that Lionsgate and the Starz premium cable channels will merge operations, brought together by the command bond of investor John Malone.

But how quickly the companies will tie the knot is still the subject of much speculation. The Los Angeles Times reported Monday that the two entities were in advanced merger talks. That was downplayed by insiders at both companies and a senior Lionsgate investor, all of whom acknowledge that the concept of merging has been discussed in abstract but disputed that talks to unite the companies are under way at this time.

Wall Street took note of the report, however, and sent Lionsgate shares soaring 7.2% in after-hours trading, hitting $42. Starz shares shot up 10% in after-hours trading to $43.

Malone personally owns a large stake in Starz, and earlier this year he acquired a nearly 3.5% stake in Lionsgate and a seat on the studio’s board. But a merger of the two companies still requires the approval of two separate boards of directors. And to that and, valuation has been a big hurdle. As of Monday, Starz had a market cap of $4 billion while Lionsgate was valued at $5.8 billion.

The Times reported that in the merger scenario that has been discussed, Lionsgate CEO Jon Feltheimer would run the combined company.

Starz has been the subject of non-stop sale speculation since it was spun off from Malone’s Liberty Media as a stand-alone entity in late 2012. Many financial observers believe that a premium pricetag is already baked in to Starz’s stock price.

The company has made strides in the past year under CEO Chris Albrecht with original programming including buzzy dramas “Outlander” and “Power.” But like all cable programmers, Starz’s cluster of 17 Starz and Encore-branded premium channels are facing some turbulence in the future as business models shift and digital distribution up-ends the traditional bundle that has long benefitted programmers with multiple channels. In a skinny-bundle environment, Starz may not be able to maintain as many channels as it offers now, which is sure to be factored into valuation wrangling, whether with Lionsgate or another suitor.

There’s also been on-again, off-again rumors about a possible Starz-AMC Networks merger. Malone has hinted at ambitions of rolling up a number of smaller cable programmers to bulk up on the content side.

Between his personal holdings and those that he controls through Liberty Media and Liberty Global, Malone has interests in everything from Discovery Communications to London-based production conglomerate All3Media.

Sources close to the situation note also that Malone and his team at present are most focused on completing the $56 billion merger of Charter Communications and Time Warner Cable, a distribution play that could provide a big platform for content options down the road as it will become the nation’s second-largest cable operator behind Comcast.

Reps for Lionsgate and Starz declined to comment on the Times’ report.

(Pictured: John Malone)

More TV

  • Greg Berlanti

    Greg Berlanti on Why Movies Are Lagging Behind TV in LGBTQ Representation

    Greg Berlanti is television’s most prolific producer. With a record-breaking 18 series from his production company greenlit for the 2019-2020 season, the openly gay Berlanti is using his power to ensure the LGBTQ community is reflected on the small screen — both in front of and behind the camera. From casting the first transgender superhero [...]

  • Legion

    How Production Designer Marco Niro Created a Visual Climax for FX's ‘Legion’

    FX’s “Legion” has always drawn inspiration not only from the Marvel “X-Men” comics on which it is based, but also from the weirder corners of pop culture. When creator Noah Hawley cast “Downton Abbey” star Dan Stevens as the lead — David Haller, a mutant whose telepathic powers have been misdiagnosed as mental illness — [...]

  • DEAR WHITE PEOPLE

    TV News Roundup: Netflix Sets 'Dear White People' Season 3 Premiere Date

    In today’s TV roundup, “Dear White People” sets an August 2 premiere and Showtime acquires the six-episode comedy series “Back to Life.” DATES “Dear White People” will return for its third season on August 2. The news was announced in a comedic sketch posted to Netflix‘s Youtube channel, in which the series’ cast members debate [...]

  • Adam Lambert Queen

    Adam Lambert on What's Changed for Gay Artists Since His 'American Idol' Run

    Ten years ago, Adam Lambert burst onto the music scene in a blaze of guy-liner, hairspray and sexual ambiguity as America’s most unlikely “Idol.” But while he had the rock star look down and a soaring voice that seduced the hard-to-impress Simon Cowell, Lambert lost. Or did he? While many blamed homophobia for his runner-up [...]

  • Loudest Voice Roger Ailes Miniseries

    Will Showtime's Roger Ailes Miniseries 'The Loudest Voice' Spark More Tell-Alls?

    Roger Ailes in 1996 supervised the launch of a multibillion-dollar business few people thought would ever get off the ground. In 2019 he may have a posthumous hand in instigating something equally complex: a ripped-from-the-headlines drama about the media industry, complete with portrayals of people who still help make it run. If that foray is successful, plenty of [...]

  • elin-hilderbrand-hulu

    Hulu to Develop Series Based on Elin Hilderbrand Novels

    Several of Elin Hilderbrand’s novels are being adapted into a Hulu drama series, Variety has learned. The potential series, which is in early development at the streamer, is based on Hilderbrand’s summer romances set in Nantucket, specifically “The Identicals,” “The Blue Bistro,” and “The Matchmaker.” Andre and Maria Jacquemetton will write and executive produce, with [...]

More From Our Brands

Access exclusive content