Hemisphere Buys Lions Gate’s 75% Stake in Pantaya Video Service

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Hemisphere Media Group Inc. is buying out Lions Gate Entertainment Corp.’s majority stake in the Spanish-language streaming service Pantaya, boosting its investment in online video as the audience for regular TV shrinks.

Hemisphere will pay about $124 million for Lions Gate’s 75% holding, using a mix of cash on hand and new financing, the company said Thursday. Hemisphere and Lions Gate formed Pantaya in 2017 as a joint venture.

Pantaya has signed up 900,000 subscribers for its service, which combines original series and movies with reruns of popular titles. Original shows like “El Juego de las Llaves” (“The Game of Keys”), a dramedy about couples who decide to trade partners, have been some of the biggest drivers of new customers.

That growth makes the service attractive to Miami-based Hemisphere, which owns Spanish-language TV networks in Puerto Rico and the U.S., even if the deal is a near-term drag on adjusted earnings and margins. Those networks lost nearly 7 million subscribers last year in those regions and Latin America.

“We’ve seen what we’ve done that works and hasn’t, and we feel tremendous confidence,” said Alan Sokol, Hemisphere’s chief executive officer. “I’ve been trying to buy out Lions Gate for a while; it makes much more sense in our hands than theirs.”

Shares of Hemisphere have risen 12% this year, closing Wednesday at $11.65. Lions Gate is up 31%.

Major streaming services Netflix Inc. and Amazon.com Inc.’s Prime Video already offer Spanish-language programming, but Sokol said Pantaya is the first streaming service to cater specifically to one of the largest untapped markets in the U.S. There are at least 40 million people in the U.S. eager to watch Spanish-language shows.

Univision Communications Inc., owner of the most-watched Spanish-language network in the U.S., has made a similar argument in pitching its new streaming service. But while Univision and Comcast Corp.’s rival broadcaster Telemundo still churn out telenovelas, Pantaya will produce more than a dozen original series that are edgier and tailored to a bicultural audience.

“There’s a big market here that no one has really addressed,” Sokol said. “It’s growing and significantly underserved.”

©2021 Bloomberg L.P.

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