Michael Newberg | CNBC
Lionsgate According to people familiar with the matter, they’re leaning more towards severing the studio division than the Starz cable and streaming division.
The company’s shares rose about 4% in pre-market trading.
This will be a change in strategy for the media and entertainment company, said in May it expects to finish filming or sell Starz by the end of the summer. In recent months, Lionsgate has held talks to sell a 20% stake in Starz to a number of potential buyers, including Vivendi-owned Canal+, who said they demanded. anonymously because the discussions are private. Those talks are not over yet, but no deal is imminent, the people said.
Lionsgate is entering talks with multiple potential partners about selling a stake in the studio business, the people said. Those talks have the potential to quickly reach an agreement that Lionsgate is more comfortable with than Starz because of stronger interest, the people said. The studio business produces feature films and television series, and includes a library of more than 17,000 titles, such as “The Hunger Games”, “The Expendables” and “Mad Men”.
Lionsgate is expected to make an official announcement of its new plans as early as Wednesday. A Lionsgate spokesperson declined to comment.
Selling shares in the studio to a private equity or strategic firm will establish a valuation for the business to run itself on. It will also provide an immediate capital injection for Lionsgate, whose shares have plummeted in recent years. Lionsgate’s market valuation is about $1.8 billion, down from nearly $7 billion at the start of 2018.
These people said that in the long term, Lionsgate is interested in selling both the studio and Starz. The company competes with much larger units – including Netflix, Disney, Amazon, Apple and Comcastof NBCUniversal – in film and television production. Lionsgate executives expect the spin-off and spin-off of Starz to be the first steps towards facilitating the sale of both units in order to maximize value for shareholders, who for know.
“We’re not going to do a stupid deal on one or both sides of the business,” said Lionsgate Vice President Michael Burns. during a Bank of America media and entertainment conference last month. “I think our shareholders will be delighted with the outcome.”
Lionsgate also plans to rebrand its international streaming service, Starzplay, to Lionsgate+, these people said. One of the people said the rebranding would take place in 35 countries in Europe, Latin America and Asia Pacific, including the UK, France, Germany, Australia and Japan. Company confirmed the change later on Wednesday morning.
The person said Starz’s streaming service will keep the Starz brand in the US and Canada. Starz is present in 63 countries and ended last quarter with 26.3 million global streaming subscribers.
Rebranding Starz to Lionsgate+ also keeps the connection between Lionsgate and Starz even as the businesses separate.
Disclosure: Comcast’s NBCUniversal is the parent company of CNBC.