News, Analysis and Informed Opinions from the Industry Experts.
Starz Deal Strengthens Lionsgate Market Reach
The marriage of Lionsgate and Starz has finally reached the altar following the announcement that Lionsgate will acquire Starz for $4.4 billion in cash and stock. The move will bring Lionsgate a new conduit to the valuable US cable market as well additional international and SVoD distribution. Starz will be able to lift its game in terms of original content in the fight against its bigger rivals HBO (owned by Time Warner), Showtime (CBS) and the growing power
Canadian-American Lionsgate built its early business on low budget horror movie franchises like Saw but really hit the ramp with the global blockbuster Hunger Games and sequels. It has also been pushing strongly into TV production to diversify. In 2015, TV production grew to 24% of Lionsgate's $2.4 billion revenue and in recent years it has produced a string of hit series which have been distributed on broadcast, cable and SVoD e.g. Anger Management, Orange is the New Black, Nashville, Mad Men, Manhattan and Nurse Jackie.
Starz is one of the top three premium Pay-TV channels in the USA, with about 24 million subscribers (55m including Encore). In the last few years it has started beefing up original content, and aired 76 episodes of original series in 2015 including Outlander, Fresh Bone and Blunt Talk. However, it is well behind HBO, which has kept original productions up to half of output, and, more recently Netflix, which has bet heavily on original series following the global success of House of Cards. Starz has been pushing into OTT delivery and has a partnership with Amazon and T-Mobile, which offers Starz Play free and unlimited to its subscribers. Starz Play also launched internationally in 2015, with a focus on the Middle East.
Starz Inc was spun out from media investment conglomerate Liberty Media in 2013, but Liberty remains the majority shareholder and the Starz deal will bring Chairman John Malone onto the management board of Lionsgate. Lionsgate owns 31% of much smaller Pay-TV channel Epix and will now probably seek to sell this. The deal is part of ongoing consolidation in Entertainment which has been occurring as most recently illustrated by the Universal Dreamworks acquisition. Next moves could include the sale of Paramount.
Here at Futuresource Consulting we deliver specialist research and consulting services, providing market forecasts and intelligence reports. Since the 1980s we have supported a range of industry sectors, which has grown to include: CE, Broadcast, Entertainment Content, EdTech and many more.