Lionsgate CEO says Starz spin-off plan could be revealed by end of summer

Starz’s US originals include The White Queen

Lionsgate CEO Jon Feltheimer says the company hopes to announce its plan for spinning off its linear and streaming brand Starz by the end of the summer.

Speaking during an investor call following the release of Lionsgate’s fourth-quarter earnings, Feltheimer said: “We are engaged in a robust and productive process with our bankers and a number of potential strategic and financial partners. We’re targeting an announcement of our plan by the end of the summer and expect a transaction could close as early as our fiscal fourth quarter.”

Lionsgate feels that Starz is undervalued and that creating a new structure would allow investors to value Starz and Lionsgate’s studio assets separately.

While Lionsgate has not commented publicly on which buyers have come to the negotiating table, Roku and Apollo Global Management are reported to have jointly made a bid to acquire a minority stake in Starz. Other potential buyers in the mix include DirecTV.

As it stands, Feltheimer said Lionsgate does not plan to sell all of Starz, but added that “anything could happen.”

After the proposed transaction is completed, Lionsgate said it would “continue to partner with [Starz] in the creation of great IP, building our library and achieving important synergies between Starz and our studio business.”

The sale process for Starz, which includes its domestic business in the US and its international streaming product StarzPlay, comes as the platform reached 35.8 million subscribers globally, an increase of 6.3 million from a year ago.

According to Lionsgate, which acquired Starz for US$4.4bn in 2016, March was its fourth best streaming month in terms of subscriber growth. During the past 12 months, subscriber churn also dropped by nearly 20% at Starz, said the company.

Starz’s US originals include Outlander, The White Queen, Power and P-Valley, while its international streaming originals include A French Case, All Those Things We Never Said, Express and Nacho Vidal: An Industry XXXL.

Across its entire business, Lionsgate called fiscal 2021 “one of [its] best content-building years ever,” with the company producing 21 feature films and 14 new shows being picked up at networks.