Lionsgate Vice Chairman Michael Burns briefed Wall Street analysts on Wednesday about ongoing talks with multiple bidders about a potential transaction involving both Starz and the entire company.
“I can tell you that the deeper we’ve gone into this over the past few months, the more convinced we are that this is the right thing to do,” Burns told the Bank of America 2022 Media, Communications and Entertainment Conference, during a conference call. session that was webcast.
Lionsgate has been exploring options for Starz, including a possible separation of its pay-TV, streaming and studio operations. The goal appears to be creating two standalone companies so that investors can value the assets of Starz and studio separately.
Burns insisted that his studio not make a quick or careless deal. “We’re not going to do a stupid deal on one or both sides of the business. But we are very encouraged with our potential partners, who in some cases are world famous, smart money and also strategically smart,” he reported.
Burns reiterated that Lionsgate was not receiving sufficient value from investors for both its core assets, the film and TV studio and Starz. And he explained why Lionsgate was considering a Starz spin-off, as rival studios vertically integrated their TV assets for scaling up.
“When we separate these companies, we want to create an interlocking synergy, a relationship between the studio and Starz. All those things are either put in place, or are being put in place,” Burns added.
“So yes, in many cases we will be ‘separated’. But in many cases we will be very much together,” he argued.
Jeffrey Hirsch, president and CEO of Starz, agreed that there would be an ongoing consolidation between the studio and the premium TV platform regardless of possible deals.
“What that looks like is up in the air. But if you look at both sides of our business, Michael and Jon [Feltheimer] have done a phenomenal job building a 17,000 title library studio, which is hard to replicate these days when you need content…that’s either becoming part of something bigger or growing bigger really fast,” Hirsch told the investor conference.
Burns also told analysts that Lionsgate wanted to preserve tax write-offs, as any transaction may have involved the Hollywood studio headquartered in Canada, outside of Starz per se. Potential suitors seem to see Starz either as a streaming platform, while others, following Amazon’s purchase of MGM, see Lionsgate and its programming library as a possible takeover of indie studios.
Lionsgate has said it would announce its decision in September after it weighed up strategic initiatives, recognizing that Wall Street analysts and investors would like to see a solution as current talks with potential dealmakers continue.
Starz is a pay TV channel similar to HBO and Showtime, and also offers a streaming service aimed at domestic and international audiences. The programming includes the Current franchise, blind spotting and hightown. Lionsgate acquired Starz in 2016 for $4.4 billion.