Lionsgate can ‘dramatically scale’ drama with Starz

Starz CEO Chris Albrecht & Lionsgate’s Jon Feltheimer

Lionsgate chairman and CEO Jon Feltheimer has said the US$4.4 billion acquisition of premium cable channel Starz is “the most transformative transaction in [the studio’s] history”.

Furthermore, the merger will provide Lionsgate a “unique opportunity to dramatically scale” production of “premium television production, which we believe is the critical success factor for any content-driven company”, he said.

Feltheimer added the combined company would invest nearly US$1 billion a year in new TV series, and US$1.8 billion when factoring in movies.

“The deal to acquire Starz will accelerate the growth of both companies, deepening our portfolio of content, expanding our access to distribution, diversifying our pathways to the consumer and unlocking enormous opportunity for long-term value creation for our shareholders,” he said.

Lionsgate brought to an end a near-two-year period on the negotiating table for Starz, which had spun out of Liberty Media in 2013. CBS Corp. has confirmed it looked at the company, while 21^st Century Fox is also understood to have kicked the tires. Lionsgate was consistently linked, and finally announced a US$4.4 billion deal in June following four months of talks.

Starz lead shareholder and cable mogul John Malone is increasing his influence within Lionsgate after both Liberty Global and Discovery both took 3.4% stakes in the business. Malone has significant shareholdings in both companies.

Feltheimer addressed analysts on Discovery and Liberty’s involvement, noting that discussions had taken place over creating content for Liberty, which this week secured its biggest ever original drama agreement, with production subsidiary All3Media.

He noted Lionsgate had set up a documentary business with Discovery, and added there were “constant conversations” with both companies over programming and distribution moves.

Elsewhere on the call, which followed good first quarter results, Feltheimer said there had been discussion about adding “third-party products” to Starz’s OTT platform, Starz Play.

Lionsgate recorded a profit of US$1.3 million in Q1, ahead of analysts’ expectations of a loss. It was posted revenues of US$553.6 million, up on the US$409 million taken a year ago.