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Home / Business / What does CBS & # 39; Pursuit of Starz for CBS, Lionsgate mean? – Variety

What does CBS & # 39; Pursuit of Starz for CBS, Lionsgate mean? – Variety



CBS & # 39; s effort to buy pay TV service Starz from Lionsgate works on the surface to be a headache.

CBS has told Wall Street for many years that it has flourished because it only brings two must-have services to the table in negotiations with MVPD, so the eye can drive hard. Why would CBS take a lower profile with Showtime?

Meanwhile, Lionsgate has presented Starz, which it purchased in 2016 for $ 4.4 billion, as the focal point of its diversification strategy with a premium television network that can serve as the launch program for new programs from its television studio. Why does Lionsgate want to sell now?

CBS & # 39; the practice of Starz comes after months of contemplation of the CBS board at the best course for the eye at a time when it is dwarf in size and global scope of its long-standing rivals, especially M&A enlarged conglomerates of Disney, Comcast and AT & T.

It's no secret that CBS's prospect of reuniting with Viacom remains strong, given the predetermined preference for controlling CBS and Viacom shareholder Shari Redstone. The news about CBS & # 39; the pursuit of Starz suggests that CBS Board of Directors is actively looking at more than Viacom for M&A and strategic alternatives.

CBS expressed its interest in Starz back in 2015 and 2016 when it was on the block. For a long time, Lionsgate was the most likely buyer of Starz, given the two companies' joint ventures with investor John Malone. Over the years, the beginning of the shiny bundle era has validated CBS 'strategy to focus on fewer power channels, compared to Viacom's fleet of nearly two dozen base cables.

But Starz is a pure subscription business, which appeals to CBS as it is less prone to cyclical fluctuations. The collection of 17 Starz and Encore branded channels has seen its subscriber base grow to around $ 25.1 million in the US, per Lionsgate's latest release, over the past year, thanks to the company's pressure to launch its standalone streaming app. has also invested in a global rollout of Starz as a streaming option – something CBS is in the middle of the CBS All Access service and Showtime ramp.

In addition, CBS sees as Star Star as Lionsgate as another launch platform for original series that can make money through international licensing, or as building blocks for future subscription offers outside the US.

Lionsgate's stock has been turned off when the company had a drought at the cashier's office – which may end this weekend if "John Wick 3" performs as expected. The discussions about Starz began with an incoming call to Lionsgate from CBS, said several sources, and these calls continue. It was welcome news for Lionsgate investors, judging by nearly 15% jump Lionsgate shares took after the news was first reported Friday by the Information. Later in the day, Reuters reported that Lionsgate counteracted CBS $ 5 billion acquisition of $ 5.5 billion, which would mark a respectable premium over the purchase price three years ago.

Reps for CBS and Lionsgate declined comment.

CBS & # 39; The board of directors is scheduled to hold the ordinary board meeting on May 29, the day of the company's annual meeting in New York. The assessment of M&A options is expected to be on the agenda. The movements at Starz indicate that the board looks hard on unexpected goals in addition to its previous siblings under the Redstone Empire.

If CBS succeeds in toughening Starz, Lionsgate must make a new story for investors. While Starz's sales may suggest something else, the company is said to be willing to use Starz, continuing to bring more resources to its content production in the context of the growing global demand for high-end series and movies.

(Image: Starz drama "Outlander")


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