Lionsgate May Spin Off Starz Into Separate Company (Report)

Studio weighing multiple options, including a sale, spinoff or a special-purpose acquisition, according to the WSJ

Lionsgate bought Starz in 2016. Three years later, the studio is looking to split the two companies, according to a report in the Wall Street Journal.

The studio is weighing a variety of options, according to the report, including an outright sale, a spinoff or a special-purpose acquisition company (SPAC). A SPAC is a new public company that is created for the purpose of acquiring a new asset. If Lionsgate were to offload Starz and its sister cable channel Encore through the SPAC avenue, the company would hold a new public offering. The WSJ, citing people familiar with the matter, reported that a “significant” chunk of Lionsgate’s nearly $2.9 billion in debt would be transferred to the new company.

A representative for Lionsgate declined to comment.

A sale of Starz, which is said to be done to lighten the studio’s debt, could make the studio an attractive acquisition target amid a wave of media consolidation. Earlier this year, Lionsgate sold off its 50% stake in cable channel Pop to CBS, which gave the company full ownership.

Investors started to make overtures towards Lionsgate about spinning off Starz through a SPAC in the last few months, according to the report, and the studio is starting to consider that option more seriously. The WSJ continued that “no final decisions” have been made.

Lionsgate bought Starz for $4.4 billion in 2016, and has in recent months worked to align the company more closely. For seven months, Starz was without a CEO following the departure of Chris Albrecht in March. Last week, Starz finally filled that role by promoting COO Jeffery Hirsch.