Michael Burns
Michael Newberg | CNBC
Lionsgate is leaning toward spinning off its studio division rather than Starz’s cable and distribution division, people familiar with the matter said.
This will be a strategic shift for the media and entertainment company, which is expected to complete a spin-off or sale of Starz by the end of the summer in May. In recent months, Lionsgate has been in talks to sell its 20% stake in Starz to several buyers, including most recently Vivendi-owned Boy+, said the people, who asked not to be identified because the discussions are private. Those talks are not over, but there is no agreement, the people said.
Lionsgate said it is in talks with several partners about selling its stake in the studio business. Those talks could reach a deal more quickly, with Lionsgate more comfortable than Starz because there is stronger interest, the people said. The studio’s business produces movies and TV series and has a library of more than 17,000 titles, including “The Hunger Games,” “The Expendables” and “Mad Men.”
Lionsgate is expected to make a formal announcement on its new plans as early as Wednesday. A spokesman for Lionsgate declined to comment.
Selling a stake in a studio to a private equity firm or strategic company sets the valuation floor for the business to trade on its own. The stock’s decline in recent years has led to a rapid decline in capital for Lionsgate. Lionsgate’s market cap is about $1.8 billion, up from nearly $7 billion at the start of 2018.
Longer term, Lionsgate is interested in selling both the studio and Starz, the people said. The company competes with major players in TV and film production, including Netflix, Disney, Amazon, Apple and Comcast’s NBCUniversal. Lionsgate executives hope the studio exit and Starz breakup will be the first steps in streamlining the sale of both units to maximize value for shareholders, the people said.
“We’re not going to make dumb deals on one or both sides of the business,” Lionsgate Vice Chairman Michael Burns said at the Bank of America media and entertainment conference last month. “I think our shareholders will be very happy with the outcome.”
Starplay brand
Lionsgate also plans to rebrand its international streaming service StarPlay to Lionsgate+, the people said. The rebrand will take place in 35 countries across Europe, Latin America and the Asia Pacific, including the UK, France, Germany, Australia and Japan, one of the people said.
The Starz streaming service will keep the Starz brand in the U.S. and Canada, the person said. Starz is available in 63 countries and ended last quarter with 26.3 million global streaming subscribers.
The rebranding of Starz to Lionsgate+ maintains the connection between Lionsgate and Starz even as the businesses separate.
Disclosure: Comcast’s NBCUniversal is the parent company of CNBC.
