Lionsgate Spins Off

Lionsgate Spins Off

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  • After months of talks over separating its businesses, Santa Monica-based Lionsgate Entertainment (LGF.A, $7.96) told investors that it has decided to focus on spinning off the studio behind the “Hunger Games” movie franchise instead of its Starz cable network. Lionsgate, which acquired Starz in 2016 for $4.4 billion, would still retain the majority of shares in the new entity.

  • Lionsgate’s studio and streaming services are expected to operate separately but remain strategically aligned, the goal is to create two singular companies for investors to separately value the assets of Starz and those of the film and TV production studio.

  • Selling a stake in the studio to a private-equity firm or strategic company will set a valuation floor for the business to trade on its own. It would also bring an immediate jolt of capital to Lionsgate, whose shares have plummeted in recent years. Lionsgate’s market valuation is about $1.8B, down from nearly $7B in early 2018.

Why it matters

Lionsgate, which is known for hit films such as “Knives Out” and the “John Wick” series, has long been the subject of takeover speculation as media giants such as Walt Disney (DIS, $99.40) bulked up. It is one of the last independent studios in Hollywood. However, The studio, which has a deep library of 17,000 titles, could be attractive to anyone looking to beef up their product offerings in an already competitive landscape for streaming platforms. Especially in the wake of Amazon’s (AMZN, $118.01) $8.5B acquisition of MGM earlier this year.


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