While analysts continue to pick apart Lionsgate’s $4.4 billion purchase of premium channel Starz, studio executives told analysts Thursday night the deal will be “transformative” for the movie studio and that pulling the trigger on the deal was not forced by media legend and Lionsgate and Starz shareholder John Malone.
Lionsgate agreed to purchase Starz on June 30, ending months of speculation around a deal. And though Lionsgate touted the deal as a win-win for both companies, some analysts have seen most of the benefits on the premium network side.
On a conference call with analysts to discuss fiscal first quarter results, Lionsgate CEO Jon Feltheimer called the Starz deal “the largest and most transformative acquisition in our history. We've been looking at Lionsgate and Starz' respective operations, pipelines and platforms, exploring all the things we can do together, and I can tell you that we’re even more excited about the deal today than when we first announced it.”
And Lionsgate vice chairman Michael Burns dismissed speculation that Malone – who swapped a 4.5% stake in Starz for a 3.4% interest in Lionsgate last year – was pressuring the movie studio into a deal with the premium channel.
“John Malone thought these two assets would fit nicely together, he’s been saying that for a long time,” Burns said on the call. “But make no mistake: We wanted the Starz deal.”
Starz has focused on original programming under CEO Chris Albrecht, and has had success with shows like Outlander, Power, Black Sails and The Girlfriend Experience. Lionsgate has been a force in TV production as well, producing past hits for other networks like Mad Men (AMC), Weeds (Showtime) and Nurse Jackie (Showtime) as well as current hits like Orange is the New Black (Netflix) and Casual (Hulu). Feltheimer said that Lionsgate will work closely with Albrecht (his office will be “five yards away” from the Lionsgate CEO’s), and Starz chief operating officer Jeff Hirsch to develop new ideas for programming. The ultimate goal, he said, is to create a brand defining show along the lines of Mad Men, Starz’s vast content library and thematic channels also are a huge benefit.
“I think it's pretty obvious that having that kind of brand defining show would be great,” Feltheimer said. “I think people though do forget it, at Starz there's so much additional content going through – there’s branded channels like the Western channel which is one of the best watched channel on anybody's platform on the Encore side. They have huge libraries, [a] huge amount of movies and just some really great series already on the air as well as a number of others that are coming up and being considered that I've read and that are really terrific and premium. But, of course, again having that big monster hit on any platform is a game changer.”