As original television content becomes more and more important as networks and pay cable channels look to provide more content directly to viewers, certain premium channels have become the target of acquisitions by studios searching to expand their reach. Now, in a deal that has been more than a year in the making, Lionsgate and Starz announced that Lionsgate will acquire the pay cable channel for a combination of cash and stock totaling $4.4 billion.
Lionsgate, producer of The Hunger Games films and television series including Orange is the New Black and Mad Men, made the agreement with Starz after both companies looked for merger partners last year. Lionsgate said in February that it wanted to explore a deal with Starz, but talks between the companies fell through in 2014.
Lionsgate, which has been investing more and more in television, considers this a major opportunity. Dr. Mark H. Rachesky, Lionsgate’s Chairman of the Board, spoke about the acquisition with the following statement:
“The combination of Lionsgate and Starz brings significant scale to our portfolio of content and distribution assets and will enable us to compete successfully in today’s rapidly evolving global entertainment marketplace.
By bringing together complementary resources, premium quality intellectual property and exceptional management, this strategic transaction positions us extremely well to unlock the underlying value of our content to create substantial lasting value for our shareholders.”
Additionally, the broad reach and general reliability of Starz and its affiliates would be attractive to Lionsgate which finished up a somewhat difficult year -- the company’s earnings and revenue slid because of underwhelming box-office performance. Owning Starz allows for some revenue diversification. Starz on the other hand, gets a solid partner to help them compete in the changing television landscape where consumers increasingly tend toward cheap limited TV packages or streaming services like Netflix.
Starz, like its competitors HBO and Showtime, has been adding more original programming to their lineup and has seen some success with shows like Outlander and Black Sails. Starz reaches 24 million U.S. subscribers with its flagship platform. With its Encore network, Starz counts 32 million subscribers. Joining the two companies will increase both's ability to grow their roster of original content, increase, and diversify their distribution.
Greg Maffei, Chairman of Starz, said:
“Together, Lionsgate and Starz form an entertainment powerhouse with a world-renowned studio that produces blockbuster movies and channels with must-have programming that will be able to capitalize on content opportunities across multiple platforms."
Together, the two companies now encompass: a 16,000-title film and television library; the largest independent television business in the world, including 87 original series on 42 U.S. networks; a feature film business that has generated over $7 billion at the global box office over the past four years.
The companies said that the deal is expected to close by the end of the year. There's no word yet on what kind of new content may be coming to Starz in terms of original programming to air alongside Outlander, Black Sails, and the critically acclaimed The Girlfriend Experience, but we will keep you updated as new is made available.
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