Starz: Past Its Prime
Johannes Salim, CFA • 15 Comments
Johannes Salim, CFA • 15 Comments
Thu, Oct. 13, 5:56 PM
- Lions Gate Entertainment (LGF -3%) has priced $520M in senior notes and allocated loans under a $2B facility.
- The company priced the $520M in debt at an interest rate of 5.875% -- lower than the 7.5% rate assumed in the company's pro forma statements reflecting its proposed tie-up with Starz (STRZA -1.1%).
- It also said loans have been allocated under its $2B term loan B facility, which it expects to be issued at 99.5% and bear interest at Libor plus 3% (with a Libor floor of 0.75%). The pro forma statements had assumed that loan would be issued for $1.9B at 100% and at interest of Libor plus 3.75%.
- The loans are set to fund part of the company's merger with Starz.
Thu, Sep. 22, 4:21 PM
- Ahead of its merger with Starz (STRZA +0.4%), Lions Gate Entertainment (LGF +0.1%) has suspended its dividend.
- The company paid its dividend of $0.09/share in August that it had declared in June; forward yield at current pricing would have been 1.7%.
- The film/TV studio signed a cash and stock deal to buy Starz for $4.4B in June. It's expected to provide "immediate" synergies, said Lions Gate CEO Jon Feltheimer, who added that the acquisition "checks off all the boxes we look for."
- Lions Gate, up as much as 4.2% today, cruised to just a narrow gain at the close.
- After hours: STRZA +0.9%.
- Previously: AT&T signs carriage deal with Starz, taking Lions Gate stake (Sep. 22 2016)
Thu, Sep. 22, 1:46 PM
- AT&T (T +1.5%) is keeping up a string of channel-carriage deals ahead of its rollout of streaming DirecTV service, signing Starz (STRZA +0.6%) to a new distribution deal that includes joining DirecTV Now.
- Part of the deal includes AT&T taking an equity stake in Starz merger partner Lions Gate Entertainment (LGF +0.7%) -- who, when its own definitive deal is done, will pay AT&T three annual installments of $16.67M in stock or cash.
- Lions Gate has signed a multi-year deal with AT&T covering transactional video on demand, pay-per-view, and electronic sell-through.
- FBR's Barton Crockett says Starz gave AT&T a "big double-digit step-down" to renew the deal in a "jarring outlier." That's expected to be offset for Starz by over-the-top revenues.
- AT&T's recent deals: Discovery, Disney, NBCUniversal, Turner
Thu, Sep. 8, 1:00 PM
- Sling TV (DISH +1.1%) has rolled out an add-on pack for Starz (STRZA -0.5%), featuring content from the Starz and Starz Encore networks.
- The move includes more than 2,900 on-demand titles and comes in time for a Sept. 10 broadcast of Star Wars: The Force Awakens, that film's first airing on TV since last December's release.
- After a free preview, the package costs $9/month on top of the regular Sling subscription price.
- Sling is also the first over-the-top service to distribute Pac-12 Networks, offering all six of the regional college sports feeds to its customers nationwide. Those are available to Sling Orange and Sling Blue customers who subscribe to its "Sports Extra" add-on.
- The company has added a Windows 10 app as well.
Mon, Aug. 1, 8:39 PM
- Starz (NASDAQ:STRZA) today extended its overall deal with Curtis "50 Cent" Jackson, executive producer of the network's flagship series Power.
- The new deal will include Jackson taking the EP helm on a new project, Tomorrow, Today, a superhero drama.
- The third season premiere of Power set new viewership records for Starz, growing more than 58% from the second-season premiere.
Thu, Jul. 28, 7:12 PM
- With a $4.4B merger with Lions Gate (LGF -2%) on tap, Starz (STRZA -1.3%) posted a Q2 revenue miss
- Revenues fell 3.6% and operating income fell 5% to $105.4M. Adjusted OIBDA came to $127.4M, up 3% and beating an expected $113.7M.
- At Starz Networks, revenues were up 3% to $343.1M with the help of price hikes from various distributors. Operating income rose 9% to $121.1M; OIBDA was up 8% to $132.1M.
- Starz subscriptions rose by 200K to a new high of 24.2M. Starz and Starz Encore subs combine for 56M.
- It bought back $23.7M in shares from May 1 through June 30; with the merger under way, the company won't be buying back any more stock.
- Press Release
Thu, Jul. 28, 4:16 PM
Wed, Jul. 27, 5:35 PM
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Tue, Jul. 19, 8:27 PM
- Following an all-time ratings record for its network, Starz (STRZA -0.3%) is giving a two-season renewal to its flagship original series Power.
- Executive producers Courtney Kemp and Curtis "50 Cent" Jackson will be back with the show in its fourth and fifth seasons.
- Starz just announced that ratings for the season three premiere set network records with 2.26M live plus same-day viewers for the initial airing (up 58% from the season two premiere), and 3.37M live plus same-day viewers for the three Sunday night airings.
Wed, Jul. 13, 6:55 PM
- Starz (NASDAQ:STRZA) has added the Roku platform for support of its Starz App, bringing its original series along with licensed hits to Roku players and Roku TV models.
- Starz's service -- which costs $8.99/month -- launched in April and includes its hit Power (with season three premiere arriving July 17), along with other key originals Outlander and The Girlfriend Experience. Later this year, the service will show Star Wars: The Force Awakens.
- Pay TV subscribers can also authenticate themselves to view content in the app.
Thu, Jul. 7, 12:09 PM
- In a Sun Valley media conference tradition, cable mogul John Malone weighed in on one of his most frequent questions: evaluating the current environment for mergers and acquisitions.
- "There's always M&A opportunities," he said. "I have nine different public companies I'm involved in, and they're always looking for opportunities."
- As for cheaper European assets post-Brexit: "Cheap is a relative term; I think it depends on your longer-term view. I think Britain's gonna be fine; I think the EU is gonna be fine. I think there are gonna be some banking, capitalization issues that have to be dealt with."
- He's coming off a $4.4B deal to combine his Starz network (STRZA +1.8%) with Lions Gate (LGF +3.1%), and "they're both subscale ... this gives them the opportunity to be bigger, be a little more aggressive in investing in content, trying new things."
- Malone's more interested in the TV business, but Lions Gate will get a new outlet for its films after tough times at the box office: "Theatrical is a tough business and you can run hot and cold ... The question is can you tame the movie business to reduce the volatility?”
- Asked about Viacom (VIA +3.1%, VIAB +3%) -- currently embroiled in a succession drama and (logically) speculation about combining it with other firms: “I’m hoping that all settles down and everybody is treated fairly,” said Malone. “Sumner [Redstone's] been a long-term friend and sometimes partner and sometimes 'frenemy.' You hate to see the stress of a family situation. I certainly hope it all works out to everybody’s benefit."
- On Viacom's sale of a Paramount stake: "Would I? The theatrical side? No, that would not be where I would go." But Viacom has "got some great assets and right now because of the turmoil they're substantially undervalued."
Thu, Jul. 7, 11:09 AM
- Starz (STRZA +1.5%) is creating the new role of chief marketing officer and named Alison Hoffman to fill it.
- The executive VP of marketing leads all consumer and affiliate marketing at Starz. She didn't comment on how marketing strategy might change amid a $4.4B acquisition by Lions Gate.
- Hoffman had joined the company in 2012 from AMC Networks.
Thu, Jun. 30, 7:23 PM
- The deal to acquire Starz (NASDAQ:STRZA) "checks off all the boxes we look for" in a deal, said Lions Gate (NYSE:LGF) CEO Jon Feltheimer in a call to discuss the $4.4B acquisition.
- It's highly accretive to earnings and free cash flow, positions us to achieve significant synergies," he said. "It's a transaction that creates a whole, greater than the sum of its parts, and is a combination that unlocks significant immediate and long term value for our shareholders.
- After rising as much as 11.6% today, Lions Gate finished down 3.4%. STRZA wrapped up the day up 5.9% after rising as much as 14.7%.
- He believes there are immediate cash savings available in not only the operational synergies, but the "extended benefit of being a Canadian multinational company" along with accumulated net operating losses.
- Starz chief Chris Albrecht will continue to run that unit and is expected to join the executive committee as well, Feltheimer said.
- The company has $4.6B in committed financing for the deal, it says, along with range for a $1B revolver that will be available for working capital.
- Previously: Lions Gate inks deal for Starz (Jun. 30 2016)
- Previously: Bloomberg: Lions Gate buyout of Starz in advanced talks; LGF +5.1%, STRZA +6.9% (Jun. 29 2016)
Thu, Jun. 30, 9:16 AM
Thu, Jun. 30, 8:17 AM
- Lions Gate (NYSE:LGF) agrees to buy Starz (STRZA, STRZB) in a cash and stock deal totaling $4.4B. Starz A class owners will receive $18 in cash along with 0.6784 of newly-created non-voting stock of LGF for each share of STRZA they hold. Starz B class owners will receive $7.26 in cash, 0.6321 of a share of LGF voting stock, and 0.6321 of a share of LGF non-voting stock.
- The offer translates to $32.73 per A class share based on Lions Gate's 20-day moving average price.
- A conference call is set for 9 ET.
- STRZA +15% to $32.50, LGF +8.2% to $22.65 premarket.
- Previously: Bloomberg: Lions Gate buyout of Starz in advanced talks; LGF +5.1%, STRZA +6.9% (June 29)
Wed, Jun. 29, 6:05 PM
- It's been discussed extensively, but a deal for Lions Gate Entertainment (NYSE:LGF) to buy Starz (NASDAQ:STRZA) is now in advanced talks, Bloomberg reports.
- Lions Gate is up 5.1% after hours; it had gained 4.1% during the regular seesion. Meanwhile, STRZA is up 6.9% in the postmarket session after gaining 2.7% today.
- A deal could come in the next few days valuing Starz at more than $30/share (postmarket quotes have Starz at $30.20 now), sources told Bloomberg. But negotiations may come down to contentious discussions between John Malone (who controls Starz voting stock) and Starz Chairman Greg Maffei on one hand, and Mark Rachesky, whose MHR Fund Management is Lions Gate's biggest shareholder.
- A deal would be mostly cash with some stock, and could be held up by Starz's unfinished carriage talks with DirecTV.