LionsGate Soars on Malone Investment

Studio Stock Rises 10%; Starz up 7%
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Shares in movie studio Lions Gate Entertainment soared by as much as 10% in early trading Wednesday after the company said cable legend and Liberty Media chairman John Malone would swap his 3.4% interest in premium channel Starz for a 4.5% stake in the studio.

Lions Gate stock rose as much as 10.8% ($3.20 per share) to $32.89 in early trading Wednesday, after the Malone investment was announced. The stock was trading at $32.52 each (up 9.5%, or $2.83 per share) at 11:18 a.m.

Starz shares also got a lift. The premium channel’s stock was priced as high as $32.80 (up 7%, or $2.10 per share) in early trading. As of 11:18 a.m. Starz stock was priced at $31.64 per share, up 94 cents each or 3.1%.

Lions Gate finished the day up 9.2% ($2.73 per share) to $32.42, while Starz closed ahead 3.45% ($1.06 per share) to $31.76.

Analysts saw the Malone investment as a positive and Starz as a possible vehicle for Lions Gate content.

“Lionsgate gets incremental leadership and perspective by adding Malone to the Board, and possibly gets a stronger content-buying client,” wrote Evercore ISI media analysts Vijay Jayant and David Joyce in a research note. “Perhaps there can be some synergies in time with Lionsgate's other premium movie channel investment partnership, 31%-owned EPIX (with Viacom and MGM Studios). Starz possibly gains more content access and evolving platform insight, as well as potential new international exposure given Lionsgate's platform.”

Jayant and Joyce increased their 12-month price target on Starz to $33 per share from $31 as a result.

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