Lions Gate Surges After Saying It Could Spin Off Starz
(Bloomberg) -- Lions Gate Entertainment Corp. surged after saying it’s considering a spinoff of its media networks business that includes the Starz channel, a division that accounted for half the company’s annual revenue last year.
The board of the independent Hollywood studio authorized management to explore potential capital markets alternatives, the company said in a filing Thursday. Options include a full or partial spinoff or issuance of a tracking stock.
“There can be no assurance that any such transaction will be announced or completed,” Lions Gate said in the filing.
Lions Gate rose as much as 20% on Friday, the most in intraday trading since March 2020. It was up 18% to $16.42 at 3:03 pm in New York.
Read more: Lions Gate 2Q revenue misses estimates
On an earnings call with investors, Vice Chairman Michael Burns said the company could still see benefits from operating the business while also unlocking value at a time when media businesses are trading at premium prices.
Starz’s hit shows include “Outlander” and “Power.” The media networks unit has about 30 million subscribers overall. Revenue in the division was flat at $385 million in the quarter and profit, at $5.5 million, was down sharply due to higher programming and marketing costs.
Starz, which originated as a premium cable network like HBO, is also now marketed directly to consumers. It’s competing with players like Netflix Inc., which spends tens of billions of dollars on programming. Lions Gate acquired Starz for $4.4 billion in 2016.
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