Dwindling Revenues, Growing Subscriber Losses Leave Lionsgate in Precarious Position with Starz
Dwindling Revenues, Growing Subscriber Losses Leave Lionsgate in Precarious Position with Starz
Did you go see the new “John Wick: Chapter 4” last weekend? By any measure, it had a spectacular debut weekend in theaters, pulling in $138 million for Lionsgate, the studio behind the series. The film is on track to be the first blockbuster of 2023, which would be a big financial benefit for Lionsgate, which is seeing decreasing returns from its premium cable channel Starz and its streaming sibling STARZ.
Lionsgate purchased Starz for $4.4 billion in 2016. Back then, the streaming market was far less saturated, as current giants like Disney+ did not exist, and what is now HBO Max was still the fledgling (and floundering) HBO Now. But the market has since passed STARZ by, and now the entire Lionsgate-Starz conglomeration is worth less than half that price, according to Bloomberg.
To solve these woes, Lionsgate has been mulling over its options with Starz. In May 2022, it was reported that Lionsgate wanted to spin Starz off into its own company that it could then, in turn, sell. Roku, DIRECTV, and others emerged as potential partners and the company seemed on track to execute the maneuver by September of last year.
But when September came, the tenor of the conversations around Starz seemed to shift. There was talk that Lionsgate would try to hold onto its streaming service/cable channel bundle, and spin off its movie studio instead.
News on the Starz/Lionsgate front was quiet for most of the winter until the company released its quarterly earnings report for the final portion of 2022. That report revealed that Starz had lost almost 1 million users between cable TV and streaming, and now Lionsgate’s movie studio is the only segment of the business that is producing robust revenue.
So what should Lionsgate do now? It finds itself in a tricky position with Starz. There might not be many sale partners out there for the cable channel/streaming service, as most other media outlets are dealing with streaming losses in the hundreds of millions of dollars. Streamers are desperately trying to find ways to become profitable, and it seems unlikely that any will jump at the chance to add Starz to their balance sheets in the midst of those efforts.
It’s true that the Starz brand still has value, but Lionsgate may have to accept a bargain price for it if the studio truly wants to unload the assets. STARZ has just 27 million global users, and it simply does not have the prestige content or deep library that other streamers do that can be leveraged to boost its profile.
All options are still seemingly on the table for Lionsgate, but each of those options is looking less attractive as the process drags out. Lionsgate will keep licensing its hit movies (like the “John Wick” franchise) to studios who make top-dollar offers, which will allow it to tread water for the time being. But it needs a cohesive strategy going forward, both for its movie studio and its premium cable/streaming package.
STARZ
STARZ offers a subscription video streaming service that gives access to content on the STARZ channel without the need of a cable subscription. With your subscription, you’ll get access to 7,500+ films and episodes, including all of their current originals like “Outlander,” The Serpent Queen,” “BMF,” and “Power.”