Lionsgate CEO Jon Feltheimer said the company plans to unveil plans for Starz by late summer and finalize a deal by next spring as the process of monetizing the premium channel and streamer progresses.
He also suggested that more M&As could be pending for both Lionsgate and Starz if the two companies were separated.
“We aim to announce our plan by the end of the summer and expect a transaction to be completed as early as our fourth quarter accounting,” the CEO said at a conference call to discuss the company’s recent earnings. Lionsgate’s fiscal year ends in March.
Feltheimer said the company is engaged in talks with bankers and “a number of potential strategic partners.”[ads1];
Canal +, a division of the French conglomerate Vivendi, has been in the mix as a potential suitor, and Roku and the Apollo Global management have jointly bid for a minority stake. DirecTV is also interested.
Lionsgate, bought Starz for $ 4.4 billion in 2016. It announced last fall that it was exploring strategic options for the cable network and streamer that has grown rapidly in streaming under Jeff Hirsch, but failed to give a boost to the parent company, which estimated that The sale of all or part of the asset can unlock value.
The company exceeded analysts’ consensus in flow last quarter, adding subs to reach a total of 35.8 million. The main focus is on Starz – up 47% from year to year – with 12.8 million from the StarzPlay International consortium, up by almost double.
“While streaming is not an end in itself, it is a very effective way to bring content to our customers around the world,” Feltheimer said.
When asked questions and answers to clarify Starz’s plans, he confirmed that the plan is for Starz to be separated from Lionsgate, which will retain a stake, with the exception of something unforeseen.
“The most important driving force for the separation is that we do not feel that the street gives us value for the sum of the parts. We feel that with the companies separate, they can both concentrate on their core businesses, and my feeling is that they both want to see some opportunities, some strategic opportunities, that they may not see while the companies are combined. “
“But honestly, anything can happen, which is why we are not giving you more details right now,” he said.
The Lionsgate share has been beaten in a volatile market that has been down a bit lately. It fell 3.7% during today’s session, but increased – by 4% – in late trading. The quarterly number and the call came after the market closed. About $ 11, the stock is still well away from their $ 52 week high of $ 21.
Feltheimer acknowledged that “this type of environment puts a damper on virtually everything. It is difficult to see our stock being hit when we have such an enormous year of value creation.” He stressed that Starz is not looking for bigger streaming rivals, but remains a niche, ad-free service that can be “created” on top of them.
“I do not think the street recognizes this. I hope potential partners do.”