In 2016, Lionsgate acquired television network Starz for $4.4 billion U.S. dollars. Starz has produced award-winning shows, like Power, Outlander, and P-Valley. But due to production delays and a soft quarter, Lionsgate has again chosen to sell or partially sell the service. For now, it will be split into two companies each with distinct purpose – one, a studio, the other, a pay-TV platform. Since it began releasing data this year, potential suitors have lined up at the door, to include, DirectTV, Canal+ (a division of France’s Vivendi) and Roku with Apollo Global bidding for a minority stake. When we first heard about the courtships, Starz stock price was sitting at $13. But in the weeks since, it has skyrocketed up to $35 as of the date of this blog. Sure, it is not the whopping $170 per share that is Netflix (which fell over 70% since last fall), but an affordable stock for many who want a piece of the streaming market, in contrast to other streamers.
It is this author’s opinion that Starz, like AMC+, has a winning, long-term strategy: to focus on niche markets. Here, Starz aims to attract the “bespoke, focused, R-rated tier,” of viewers. Which is why it is so surprising that the largest increase of subscribers hails from conservative, theocratic monarchies like Saudi Arabia, and further, streams in 17, southwest Asian (i.e. the Middle East) countries since 2015 (63 countries worldwide according to recent reports from 2022). Since that time, Starzplay Arabia has grown to 12.8mm subscribers, as compared to the 23mm subscribers according to Starz Q1 reports in 2022. Together, the global subscriber base is a respectable 35.8mm subscribers. If sold, Lionsgate intends to remain majority partner, while allowing another party to do the heavy lifting of making the company profitable. Without the operational responsibility of Starz, Lionsgate can focus on making movies (it is known for the John Wick and Expendables franchises).
Those following the sale report that a deal could announce as soon as August 4, 2022. The question then becomes, how the next suitor will make Starz profitable. Circling back, those close to the matter speculate that other “free radicals,” (to use former majority shareholder John Malone’s words) such as AMC Networks, or A&E Networks, may be strong allies in a merger or otherwise acquisition deal. That may be the option, since every large media company, including CBS (in 2019), chose not to buy Starz. The goal for spun-off Starz will be to scale enough to turn a profit, while maintaining its A+ quality content.
