The deal calls for Viacom’s Paramount Pictures and Lionsgate to continue licensing new theatrical releases and library titles to Epix’s linear channels and streaming service for a term of at least five to six years. The sale of the company had been expected ever since Lionsgate bought rival pay-TV group Starz last summer.
At that time, Lionsgate CEO Jon Feltheimer was clear that it planned to exit the Epix partnership as an owner in an effort to focus on Starz and bring in some extra coin on a non-core asset. In a Securities and Exchange Commission filing, Lionsgate said its share of the sale would be about $397.2 million.
The timing of the sale is also good for Viacom, which is in the midst of a corporate turnaround effort that also involves streamlining operations and focus on core properties.
For MGM, meanwhile, Epix’s four linear channels are a fit with its efforts to expand its TV operations. The channels have about 15 million subscribers at present.
“The addition of Epix provides MGM with a premier distribution platform that complements our strong stable of new and library content in both film and television,” said MGM chairman-CEO Gary Barber. “The acquisition creates increased revenue diversity, new opportunities for growth, and earnings accretion for the benefit of stockholders.”
Mark Greenberg, Epix’s founding president-CEO, will remain at the helm of the company, based in New York. The former HBO and Showtime exec spearheaded the creation of Epix for the three studios, all of which had previously had pay TV output deals with Showtime. Epix launched its linear service in October 2009, and from the start it had an authenticated streaming component.
Epix has grown into a profitable venture for the partners, generating upwards of $100 million in operating income last year, according to a source. The move to a single owner should help the company focus its strategic priorities, including its original content efforts. The company has distribution on most of the major MVPDs while its paid app is available via Apple TV and Amazon, among other digital distributors. Comcast and DirecTV remain the last big holes in its linear distribution lineup.
With MGM as the parent company, Epix can be a domestic platform for series that MGM can sell to overseas buyers. Epix as of last year has been ramping up original series with projects from all three partner studios: comedy “Graves,” drama “Berlin Station,” and a comedic spin on the 1993 MGM film “Get Shorty,” which premieres later this year.
“The difficult part of a joint venture can be how you make your choices between three family members,” Greenberg told Variety. “Now this allows us to keep the course and try to move into originals in a bigger way.”
After Lionsgate indicated its inclination to sell, there was some chatter about outside buyers pursing Epix. But Greenberg said the focus was always on cutting a deal with MGM.
Barber “has always been a huge supporter of Epix,” Greenberg said. “We’ve grown very fast in seven years but we’re not finished yet.”