Lionsgate to ‘Explore’ Starz Acquisition

Investor John Malone is key player in potential merger

Lionsgate is looking into a potential acquisition of Starz — again — per a Thursday filing with the Securities and Exchange Commission.

This time, however, it sounds more serious.

“Lionsgate has informed the Issuer that it intends to explore whether there is a potential mutually beneficial combination of the two companies,” Starz shared in its Schedule 13D.

The “Issuer” is Starz; Lionsgate is referred to as the “Reporting Persons” in the SEC filings. Read the filing more in depth here.

Potential combinations of Lionsgate and Starz could involve just stock, or a combination of stock and cash. For an idea of their relative size: Jon Feltheimer‘s Lionsgate has a market cap of $3.86 billion. The smaller Starz, run by Chris Albrect, has a market cap of $3.09 billion.

The expectations are that any merger would “recognize the relative values of both companies and that the benefits of a transaction should be shared appropriately by both companies’ shareholders,” the filing stated.

In other words, Advantage: Lionsgate.

Major media investor John Malone, chairman of the board at Liberty Media, recently brought the two companies closer together, though they had been flirting for some time even before that. Dr. Malone sits on Lionsgate’s board.

Pay-TV cable channel Starz currently boasts 23.3 million subscribers. The company’s Encore has even more than that.

At the time of this writing, both Lionsgate and Starz stock was trading up. STRZA was the bigger beneficiary of the news, in terms of early share price growth. Starz is set to unveil its fourth-quarter and full-year 2015 financials on Feb. 25.

Lionsgate will report today, after the U.S. stock markets close. The entertainment company will hold a conference call with investors and media analysts Friday morning.