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Discovery, Liberty buy into Lionsgate

Discovery Communications and Liberty Global have each acquired a 3.4% stake in Lionsgate in a deal worth US$390m, increasing John Malone’s influence at the production giant.

John Malone

John Malone

The 10 million shares in total are being acquired from MHR Fund Management, the investment company owned by Lionsgate chairman Mark Rachesky. The companies will pay US$195m each for their stakes while Rachesky continues to own 27.2% of the firm.

The move gives John Malone, the biggest single shareholder in Discovery Communications and Liberty, roughly a 10% stake in Lionsgate spread over three companies.

Earlier this year Malone traded his stake in Starz for 3.4% of Lionsgate shares and a seat on the company’s board. Malone continues to own just shy of 50% of Starz and Lionsgate had been linked with a merger with the premium US cablenet.

Frank Giustra, who founded Lionsgate in 1997, is stepping down from the board after 11 years as part of the changes.

Liberty Global president and CEO Mike Fries and Discovery president and CEO David Zaslav are joining the Lionsgate board of directors as a result of the deal along with MHR’s principal and investment committee member Emily Fine.

Liberty and Discovery are each entering into separate commercial agreements with Lionsgate to become preferred partners on licensing rights for certain theatrical and television content across their markets.

“This strategic content investment will create opportunities for Lionsgate to become an even more important supplier of high-end premium content to our 24 million video and 18 million broadband subscribers,” Fries said.

Lionsgate is known for its Hunger Games and Twilight movie franchises, and TV drama series Mad Men.

The move follows the US$930m joint-venture purchase of production group All3Media by Liberty and Discovery Communications which was confirmed in May last year.

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