Fox, Starz Hold ‘Courtesy’ Talk

Sources Say No Deal Interest on Fox’s Part
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A month after its chairman and chief operating officer repeatedly told analysts and the media that it had no acquisitions targets on its radar in the wake of its abandoned bid for Time Warner Inc., 21st Century Fox executives, apparently not getting that particular memo, have reportedly held preliminary talks with premium cable channel Starz about a possible deal.

According to a report in the Los Angeles Times, several unnamed Fox executives held a meeting Tuesday on its studio lot in Los Angeles with Starz CEO Chris Albrecht and investment bankers. A source familiar with the situation told Multichannel News that the talks were held Tuesday as a courtesy and that there is no interest on Fox’s part to do a deal.

That seems to jibe with statements made recently by Fox chairman and CEO Rupert Murdoch and chief operating officer Chase Carey, who had repeatedly told analysts and the media that it is not pursuing acquisitions.

“Let me be clear, we are done,” Carey said shortly after the company dropped its pursuit of Time Warner, adding that it would not seek out alternative acquisitions, pledging instead to focus on organic growth.

Fox had made an unsolicited $80 billion for Time Warner back in June, which Time Warner summarily rejected. In August, Fox formally withdrew its offer.

Recently Murdoch told Fox Business Network anchor Neil Cavuto that he decided to drop the Time Warner pursuit in part because he didn’t want to take on a massive amount of debt.

A Starz deal wouldn’t require a huge borrowing – while reports said a deal could be worth as much as $3.2 billion, some analysts value the premium service as high as $4.7 billion. Fox, which recently sold its interest in its European satellite ventures Sky Italia and Sky Deutschland to its other satellite holding -- British Sky Broadcasting – netting about $7.2 billion in cash after taxes, could finance a Starz deal internally.

But there are roadblocks to a combination, particularly Fox’s commitment to sell its movie studio output to Time Warner’s Home Box Office until 2022.   

The reports seem to suggest that Starz, which spun off from Liberty Media in 2013, is putting itself in play, which has pretty much been the case since its separation from Liberty. Back in 2012 Liberty chairman John Malone said that Starz would benefit from a post-spin off “big brother.”

While Starz has beefed up its original programming slate of late and is headed by former HBO chief Chris Albrecht  and has scored recent critical and ratings success with series like Outlander, Black Sails andPower.

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