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Lionsgate Says It’s Leaning Toward Spinning Off Studio, Not Starz

Lionsgate is now looking at spinning off its studio business — rather than kicking out the Starz premium network and streaming business.

The company, in an SEC filing Wednesday, said that “Despite the volatile market environment” Lionsgate remains “on a path to separating our Starz and studio businesses.” However, Lionsgate is increasingly focused on divesting the studio side of the house.

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“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 company said in an SEC filing Wednesday. “In that regard, we are continuing productive negotiations with prospective strategic and financial partners on both sides of our business.”

Lionsgate did not identify the parties it’s involved in talks with.

Lionsgate’s disclosure about potentially spinning off its studio biz came as the company also announced that it is rebranding Starzplay, its international streaming service, has been rebranded as Lionsgate+. The rebranded Lionsgate+ will be available in 35 countries including the U.K. and Canada on Sept. 29. In the U.S., the name of the Starz streaming service will not change.

The company had previously announced that it was considering spinning off or selling Starz, which it acquired in 2016, as part of reducing debt. Among the suitors were Roku and private-equity firm Apollo Global, which had teamed up on a bid to acquire a minority stake in Starz.

On Lionsgate’s Q2 earnings call in May, CEO Jon Feltheimer said the media company was aiming to announce its plan for Starz by the end of the summer — which, of course, did not happen — with a potential transaction closing as early as Q1 2023.

Lionsgate has evidently concluded that the long-term economics of streaming are more attractive than the studio business. In the second quarter, Starz’s global streaming subscriber base grew by 4.8 million sequentially, to 24.5 million, which was up 47% from the year-earlier period. On the call, execs reiterated that they expect Starz to hit 50 million-60 million global subscribers (TV and streaming) by the end of fiscal 2025. Overall, Starz had 35.8 million customers worldwide at the end of March (up 21% year over year).

In explaining the rationale for the rebranding from Starzplay to Lionsgate+, Starz president and CEO Jeffrey Hirsch said the change “brings a distinct and differentiated identity in an increasingly crowded international marketplace and builds on the brand equity in the Lionsgate name that our extensive research has proven is strong around the world.”

Even after the separation of Starz and Lionsgate’s studio business, Hirsch added, “the Lionsgate brand will continue to be valuable to the ongoing success of our international platform.”

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