MGM to complete $1bn Epix deal

US studio MGM is to acquire the remaining 81% of cable channel Epix that it doesn’t already own, in a deal valued at US$1bn.

It comes after news broke last month that MGM was in talks with joint-venture partners Viacom and Lionsgate to acquire the network.

Viacom, which holds a 50% stake, is keen to service its US$12bn debt mountain, while Lionsgate’s recent purchase of Starz Entertainment makes its 31% interest in Epix surplus to requirements.

The deal will give MGM control over Epix’s four linear pay television channels (Epix, Epix2, Epix Hits and Epix Drive-In). Meanwhile, Viacom-owned Paramount Pictures and Lionsgate will have multi-year agreements to bring first-run feature film content to Epix.

Epix has been expanding its operations over recent years, appointing NBCU exec Jonathan Dakss for its digital service and producing original dramas including Berlin Station. It is estimated to have 14 million subscribers.

MGM, owned by hedge funds Anchorage Capital Partners and Highland Capital Partners, emerged from bankruptcy in 2010.

It produces and distributes shows including Fargo for FX and Vikings on A&E, with a movie library including the James Bond and Rocky franchises.

“The addition of Epix provides MGM with a premier distribution platform that complements our strong stable of new and library content in both film and television,” said Gary Barber, chairman and CEO of MGM.

“The acquisition creates increased revenue diversity, new opportunities for growth, and earnings accretion for the benefit of stockholders.”

Bob Bakish, president and CEO of Viacom, said: “As Viacom executes against its new strategy, we welcome the opportunity to strengthen our balance sheet by realising the value of our equity investment, while also extending the successful commercial partnership between Epix and Paramount Pictures with a new multi-year output agreement.”

Lionsgate CEO Jon Feltheimer added: “Though we are shifting our investment focus to our wholly owned platforms, we wish CEO Mark Greenberg and the rest of the Epix team, along with Gary Barber and his colleagues at MGM, great success in continuing Epix’s strong growth in the future.”

The transaction is subject to regulatory approval and is expected to close this month.