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Lionsgate Says Starz Deal Will Make it a “Global Powerhouse”

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http://variety.com/2016/film/news/lionsgate-starz-deal-global-content-powerhouse-1201806588/

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Lionsgate’s $4.4 billion deal to buy Starz will turn the entertainment companies into a “global content powerhouse,” Lionsgate CEO Jon Feltheimer told investors on Thursday.

In a conference call following the announcement that terms of a pact had been reached, Lionsgate and Starz brass predicted that the long-gestating union will help transform the cable and film businesses and allow them to better compete in a media marketplace dominated by conglomerates. At the same time, Feltheimer refused to rule out breaking out the checkbook for another acquisition, saying that Lionsgate will be “ready for any opportunist that come our way.”

The pact brings together Lionsgate, the studio behind “Orange Is the New Black” and “The Hunger Games,” and Starz, the maker of “Outlander” and “Black Sails.” It also fulfills billionaire investor John Malone promise of consolidating smaller entertainment companies so they can better withstand the disruptions taking place in the media space — a series of shockwaves being set off by the rise of digital streaming services and the migration away from traditional distribution platforms like cable and theatrical exhibition. Merger talks have moved forward in fits and starts since 2015 when the Malone-controlled Starz swapped stock with Lionsgate.

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Lionsgate to Acquire Starz for $4.4 Billion

In a call, Feltheimer predicted that bringing Starz into the fold will help Lionsgate better compete in a “fat bundle, skinny bundle, or no bundle” future — a reference to television companies’ habit of selling packages of their more desirable channels with their less popular ones to cable providers. There are fears that as consumers ditch cable packages for digital offerings they will undermine the financial underpinnings of many entertainment players.

It was a call that was full of big promises and light on details. Lionsgate brass said that buying Starz will allow them to achieve synergies without detailing those cost savings. They also said that they planned to talk to Metro-Goldwyn-Mayer and Viacom about their role in Epix, a cable joint venture, without saying definitively if they planned to unload their stake now that they could have their own in-house pay-television arm in Starz.

“We look forward to having conversations with [our partners] about maximizing our mutual investment,” Feltheimer said.

Lionsgate did say that it planned to retain Starz CEO Chris Albrecht, who has been credited with growing the cable channel’s original programming. Earlier this week, Albrecht renewed his deal to stay at Starz through 2020.

“The opportunities are enormous,” Albrecht said. “I’m looking to just contribute in any way that I can.”

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