Report: Lionsgate to Spinoff Starz as Soon as August; Could Starz then Look to Acquire Other Channels?
After reports began circulating in May that Roku was amongst bidders to acquire a piece of premium cable network Starz, the channel’s parent company Lionsgate confirmed that it was hoping to spin off the cable and streaming service into a standalone company by the end of the summer.
Now, CNBC’s Alex Sherman is reporting that the move could be made official as soon as Aug. 4, in just over one month’s time. The plan would see both the linear and streaming versions of the channel become a separate company still primarily owned by Lionsgate, but separate from the rest of the studio’s operations.
Sherman confirmed that Roku, Vivendi’s Canal Plus, and private equity firm Apollo Global have made a preliminary bid to own 20% of the newly formed company. Just one week before the news of Roku’s interest in buying a share of Starz, the streamer announced an exclusive deal with Lionsgate to be the primary ad-supported video-on-demand (AVOD) service for the company’s films. Roku will have an exclusive window to stream the movies following their debut on Starz. By purchasing part of the channel, Roku would undoubtedly have more convenient access to the platform’s premium content.
Lionsgate is expected to have its next earnings day on, or around, Aug. 4, making it an ideal day for an announcement of this magnitude. When Lionsgate purchased Starz in 2016, the studio paid $4.4 billion for the network, but now Lionsgate is valued at just $2 billion. Based on information about the minority stake bids, the initial valuation for a siloed-off Starz comes in between $2B to $4B; meaning that Lionsgate could double or triple its value with the move.
When Lionsgate last issued a report to stockholders, Starz’s streaming arm boasted 24.5 million subscribers, while the linear network was at 9.5 million. These combined totals are considerably smaller than most of its competitors, meaning that Starz will need to grow substantially to compete with the likes of Netflix, Prime Video, HBO Max, Disney+, and others.
Should the spinoff come to fruition, Sherman believes that Starz could pursue a merger with other small to middle-sized entertainment companies like AMC Networks or A&E Networks. While this type of move would not immediately catapult Starz into the same stratosphere as its more established rivals, it would give the company a more stable footing to position itself for the future.
AMC’s streaming services — AMC+, Shudder, Sundance Now, Acorn TV — saw a rise to a combined 9.5 million subscribers following the first quarter of the year. That subscriber count remains on target to reach 25M subs by 2025. If AMC was to be acquired by Starz, their current roughly 34M subscribers (not accounting for subscriber overlap) would rank just above Apple TV+, but behind Paramount+ and Hulu.
However, as a standalone business, no longer beholden to larger corporate relationships, Starz would have the flexibility to become a home for channels, streamers, and studios that find themselves on the outside as streaming consolidation inevitably accelerates.
Whatever happens with Starz in the future, it is clear that nearly all media companies are reshaping their business plans with an eye on the streaming future. If Starz is going to morph from a second-tier premium channel with increasingly compelling content like “P-Valley,” the “Power” franchise, “Outlander,” “Gaslit,” and more, a separation from the Lionsgate studio apparatus could be the first step.
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.”