Lions Gate Entertainment Corp. said Wednesday it’s now focusing on spinning off its studio business, instead of its Starz cable channel, sticking with a plan to separate the two despite volatile markets. The movie and television production company had said in May it was considering selling or spinning off Starz, a pay-TV and streaming service that’s known for series such as “Outlander” and “Power.” The company acquired Starz for $4.4 billion in 2016.
“As negotiations progress, we have increased our focus on the possibility of spinning our studio business, creating a number of financial and strategic benefits,” the TV and streaming business said in a regulatory filing. “In that regard, we are continuing productive negotiations with prospective strategic and financial partners on both sides of our business.” The company
has said it expects the two businesses would fetch a higher valuation separated than together. On its most recent earnings call, management said they expected to finalize a deal by the end of September. See also: Roku and Apollo Global team up to bid for minority stake in cable channel Starz Cowen analysts said it makes little difference to shareholders which asset is spun out and which is the ‘parent’, apart from technical details around such things as taxes and debt covenants. “In order to create value, the company needs to find an external buyer who will put actual capital up for one or both assets, both creating a mark for the asset and helping lower company leverage,” analysts Doug Kreutz and Mei Lun Quach wrote in a note to clients. ” While current market conditions are undoubtedly hindering this process, we also think the strategic rethink that is going on about content spending at some (if not all) large streaming services may also be …