What does Starz mean by CBS for CBS, Lionsgate? – Variety



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CBS's effort to buy Lionsgate's Starz pay-TV service seems to be a headache.

For years, CBS told Wall Street that it had prospered because it offered only two essential services during negotiations with the MVPD, which allowed the Eye to carry out a difficult business. Why would CBS want to attack a less well-known rival than Showtime?

At the same time, Lionsgate introduced Starz, which it had acquired in 2016 for $ 4.4 billion, at the heart of its diversification strategy with a premium television network that can serve as a launch pad for new programs. from his television studio. Why would Lionsgate want to sell now?

CBS's Starz suit comes after months of board deliberations on the best way forward for Eye, while its long-time rivals, including the expanded M & A conglomerates of Disney, Comcast and AT & T .

It is no secret that the prospect of reuniting CBS with Viacom remains strong, given the preference shown for Shari Redstone, shareholder of CBS and Viacom. The announcement of the CBS Starz hunt suggests that the CBS Board is actively considering more than Viacom for strategic merger / acquisition options.

CBS has expressed interest in Starz in 2015 and 2016, when it was already present. Lionsgate has long been considered the most likely buyer for Starz, given the joint ties between the two companies to investor John Malone. Since then, the dawn of the lean packet era has validated CBS 'strategy of focusing on fewer powerful channels, compared to the Viacom raft of nearly two dozen basic cables.

But Starz is a purely subscribed company, which appeals to CBS because it is less vulnerable to cyclical fluctuations. The collection of 17 Starz and Encore brand channels saw all of its subscribers grow to approximately 25.1 million in the US, according to Lionsgate's latest release last year, thanks in large part to the the company's desire to launch its stand-alone broadcast application. Lionsgate has also invested in the worldwide rollout of Starz as a streaming option – something that CBS is putting in place for its CBS All Access and Showtime service.

In addition, like Lionsgate, CBS sees Starz as another platform for launching original series that can be monetized through international licenses or as a basis for future subscription offers outside the United States.

Lionsgate shares have been hit by drought at the box office that could end this weekend if "John Wick 3" behaves as expected. The Starz discussions began with an incoming call to Lionsgate from CBS, several sources said, and these conversations continue. This was good news for Lionsgate investors, judging by the leap of nearly 15% in Lionsgate shares after the news's first announcement on Friday. Later in the day, Reuters announced that Lionsgate had countered the $ 5 billion opening of CBS with $ 5.5 billion, which would be a respectable premium over its purchase price three years earlier.

Representatives from CBS and Lionsgate declined to comment.

The CBS Board of Directors is scheduled to meet regularly on May 29, the day of the company's annual meeting in New York. The review of merger and acquisition options should be on the agenda. Movements on Starz suggest that the board closely studies the unexpected goals in addition to its former brother under the Redstone empire.

If CBS succeeds in courting Starz, Lionsgate will have to come up with a new story for investors. Although the sale of Starz may suggest otherwise, the company would be willing to use Starz revenue to devote more resources to its content production business given the growing global demand for high-end series and movies.

(In the photo: Starz drama "Outlander")

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