Roku and private-equity firm Apollo Group have partnered on a bid to acquire a minority stake in Starz, the Lionsgate-owned cable network and streaming service, Variety has confirmed.
Lionsgate bought Starz for $4.4 billion cash and stock deal in 2016; the company’s market cap is now around $3 billion. Lionsgate announced in November that its board had approved looking at spinning off or selling Starz. News about Roku and Apollo bidding for a stake in Starz was first reported by the Wall Street Journal.
Roku and Apollo are among multiple bidders kicking the tires on Starz, according to sources. Private-equity firm TPG Capital, which owns 30% of DirecTV after AT&T spun off the satcaster last year, may have been interested in Starz at one point but it’s unclear whether TPG is currently in the mix.
It’s unknown what percentage of Starz is on the table. The Journal reported that Roku and Apollo could acquire “up to a 20% stake in Starz” but that the companies have disagreed with Lionsgate on the value of the stake.
Reps for Lionsgate and Roku declined to comment. A spokesperson for Apollo did not immediately respond to a request for comment.
For Roku, owning a piece of Starz would help boost its content business, which revolves around selling ads and subscriptions via the Roku Channel.
Last week, Roku announced an output deal with Lionsgate for upcoming theatrical releases, covering films including the “John Wick” franchise, “Expendables 4,” “The Unbearable Weight of Massive Talent” starring Nicolas Cage and the upcoming adaptation of beloved Judy Blume novel “Are You There God? It’s Me, Margaret.” Under the pact, the Lionsgate titles will come to the free, ad-supported Roku Channel after an initial pay 1 window on Starz.
In the fourth quarter of 2021, the Roku Channel reached U.S. households with an estimated 80 million people. The Roku Channel was a top 5 channel on the Roku platform in the U.S. by active account reach and streaming hour engagement in Q1 2022, while growth of total Roku streaming accounts slowed in the period compared with the pandemic-driven gains in the year-earlier period.
Starz original series include thriller “Power” and spinoffs including “Power Book II: Ghost,” as well as “Outlander,” “Hightown” and “P-Valley.” According to Lionsgate, Starz’s global streaming subscribers hit 19.7 million as of the end of 2021, up 1.7 million sequentially and up 44% year over year, while Starz lost a net 1.7 million linear TV subs in 2021 (down 13% year over year) to stand at 11.7 million.
Asked on Lionsgate’s earnings call in February for an update on Starz’s potential sale, vice chairman Michael Burns responded that “we are working with a terrific team of advisers with complementary strength and expertise as we continue the process of unlocking the shareholder value within our two core businesses.” He added, “we will be providing additional updates on our progress at the appropriate time.”
Pictured above: Omari Hardwick in Starz original series “Power”