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Lions Gate considering jettisoning Starz: WSJ
Posted on Wednesday, 09 October 2019 11:54
Lions Gate Entertainment is weighing a separation of premium-cable channel Starz in a bid to reduce its debt pile, sources with inside information on the matter told the Wall Street Journal (WSJ).
These people, who asked not to be identified as the matter is still private, said the company is in discussions to spin off the producer of popular television programme Power and is looking into a variety of options including a sale to a special purpose acquisition vehicle (SPAC).
While no final decision has been made at this time, interested investors have reportedly already approached Lions Gate about separating Starz from the main group to allow shareholders to invest directly in either business.
The potential target is also likely to be spun off with sister channel Encore through the SPAC, a public company created with the purpose of acquiring an asset and taking on its name and operations.
According to the WSJ’s sources, Lions Gate is expected to shift some of its USD 2.90 billion debt load into the new business, should a spin-off take place.
The company purchased Starz for USD 4.40 billion back in 2016.
In May 2019, Reuters cited people familiar with the matter as saying CBS is interested in acquiring the group for USD 5.50 billion, following a previous offer of USD 5.00 billion that was rejected by Lions Gate.
Starz has a strong following thanks to popular shows such as Power and Outlander; however, earlier this year AT&T’s DirectTV unit decided to cut the amount it pays the film production company and Comcast is considering dropping both the channel and Encore when its contract expires at the end of the year, insiders told the WSJ.
In the opening three months to 30th June 2019, Lions Gate recorded revenues of USD 963.60 million, up 3.3 per cent from USD 932.70 million in the corresponding period of 2018.
The business’ net loss widened to USD 58.40 million in Q1 2020, compared to a loss of USD 11.40 million in the first quarter of fiscal 2019.
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