Starz: Past Its Prime
Johannes Salim, CFA • 15 Comments
Johannes Salim, CFA • 15 Comments
Is Starz Prepping To Be Sold Or Actually Trying To Grow?
Starz: Past Its Prime
Johannes Salim, CFA • 15 Comments
Johannes Salim, CFA • 15 Comments
Thu, Apr. 28, 10:47 AM
- Lions Gate Entertainment (NYSE:LGF) is up 6.9% to its highest point in five weeks on no catalysts other than some peer M&A today, in DreamWorks Animation's $3.8B deal to be acquired by Comcast.
- Lions Gate has been linked in the past year to heavy merger rumors with John Malone's companies, after Malone's Liberty Global (NASDAQ:LBTYA) and Discovery Communications (NASDAQ:DISCA) made a strategic deal with the studio -- and then Malone floated public comments regarding a potential tie-up/merger with Starz (NASDAQ:STRZA), in which he also holds an interest.
- Bloomberg analyst Paul Sweeney figures Comcast's deal price means a multiple of at least 19.5 times DreamWorks Animation's 2016-2017 EBITDA -- which multiple is a 28% premium to Lions Gate, which runs similar TV and movie interests.
- And Lions Gate may be more attractively valued than during the fall rumors, after a weak fiscal Q3 tanked shares in early February and the studio's recent films, like The Divergent Series: Allegiant, are underperforming.
- Now read My Top Media And Publishing Stocks For 2016
Wed, Apr. 27, 5:35 PM
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Tue, Apr. 5, 1:53 PM
- Movie network Starz (STRZA -1.7%) has joined the streaming-app party with its own over-the-top service.
- The service is priced at $8.99/month (vs. HBO Now's $14.99, and Showtime's $10.99) and has a notable differentiator: a "download" button allowing content to be locally saved. It's available on iOS and Android devices.
- CEO Chris Albrecht says the company looked at what HBO and Showtime did and decided to develop its own app in-house "for a fraction of the cost."
- "We have a great business with our long-term MVPD partners, but there's a lot of opportunity to access consumers who are more challenged to get premium television on top of the pay-TV stack," Albrecht says. Starz won't cross-advertise the new service on pay TV platforms, he added.
- He rebufffed questions about whether the new service would help spur possible tie-ups with Lions Gate or CBS: "We're not doing anything purposely to create any result other than grow the value of our company."
- Now read Starz: An Attractive Media Asset On Sale »
Mon, Mar. 14, 12:03 PM
- Lions Gate (NYSE:LGF), frequently the subject of merger rumors of late, could get pushed into a deal by activists who have been ramping up stakes in the indie studio.
- Alibaba and Netflix (NASDAQ:NFLX) are linked by analysts as possible suitors with an eye to building up content stores, The Deal notes.
- Jana Partners and Barry Rosenstein lifted their share of the studio to 5.7% last month, making it No. 3 among outside shareholders. And Eminence Capital has built a stake near 1%. Canadian companies such as Lions Gate require only a 5% stake to requisition a special shareholder meeting to press board changes.
- As usual, John Malone is the X-factor, with a distinct interest over the past year in what happens to Lions Gate. Last fall, Liberty Global (NASDAQ:LBTYA) and Discovery Communications (NASDAQ:DISCA) entered a long-term strategic deal with the studio (Malone has large stakes in those two, along with a 3.4% LGF stake taken in February). And he had floated an LGF tie-up with Starz (NASDAQ:STRZA), in which he also holds a stake among others.
- Another likely merger appeal: With a Vancouver base, Lions Gate could serve as part of a tax inversion deal.
Thu, Feb. 25, 5:17 PM
- Starz (NASDAQ:STRZA) is off 1% in postmarket trading following Q4 earnings where revenues fell in its core Networks business amid some distributor mergers.
- Adjusted OIBDA came to $68M, down 54% -- the company has been investing heavily in original programming -- and operating income was down 60% to $54.9M.
- Revenue by segment: Starz Networks, $332.6M (down 1.4%); Starz Distribution, $85.6M (up 16.9%); Starz Animation, $7.7M (down 80.5%).
- The company increased subscriptions by 300,000 in the quarter, to reach a new high of 23.6M. Combined Starz/Encore subs came to 55.8M.
- In its original programming push, its 76 episode of original series has drawn close to the company's long-term target of 80-90 episodes, and original series drew six Golden Globe nominations.
- Press Release
Thu, Feb. 25, 4:41 PM
Wed, Feb. 24, 5:35 PM
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Thu, Feb. 18, 7:34 PM
- Battered media stocks came in for some (valuation-based) love from Deutsche Bank, which adjusted its price targets on a number of names today, with some of them at multi-year lows to create a "selective buying opportunity."
- It saved its only price-target hike for one of its top picks, Time Warner (TWX -0.1%). Analyst Bryan Kraft raised his target on the stock to $93, from $88; that implies 44% upside from today's close of $64.62.
- His other top picks in the sector include Twenty-First Century Fox (FOX -0.2%, FOXA -0.3%), Buy-rated but with a price target cut to $37 from $40 (implied 40% upside for FOXA); CBS (CBS -1.7%) and Starz (STRZA -3.1%).
- Also coming in for target cuts also were Walt Disney (DIS -0.3%), lowered to $113 from $114, implying 18.7% upside, and Viacom (VIA -0.4%, VIAB -0.4%), cut to $38 from $56, implying 6% upside on B shares.
- It's been a rough winter for most of the stocks. Returns over the past three months: TWX -10%, FOXA -12.9%, CBS -10.8%, STRZA -37.5%, DIS -19.4%, VIAB -32.8%.
Fri, Feb. 5, 11:39 AM
- Lions Gate (NYSE:LGF) has hit a three-year low, tumbling 30.6% in its worst decline since going public, after a dim Q3 earnings report that showed weakness in its film results. The move is knocking half a billion dollars off the studio's market cap.
- Starz (NASDAQ:STRZA) -- now back in merger talks with Lions Gate -- has tanked 15.7% as well so far today.
- FBR & Co. has cut its price target on Lions Gate twice since Thanksgiving -- first from $43 to $38 at the end of November, and then from $38 to $31 on Monday. Shares closed at $25.45 yesterday and are trading at $17.72 today.
- Stifel Nicolaus this morning cut its price target to $35, from $42. It holds a Buy rating on the stock, as does FBR. B. Riley on Wednesday reiterated its Buy rating and $50 price target.
- Previously: Lions Gate down 5.3% as movie weakness spurs Q3 misses (Feb. 04 2016)
- Previously: Lions Gate Entertainment misses by $0.07, misses on revenue (Feb. 04 2016)
Wed, Feb. 3, 4:27 PM
- Lions Gate (NYSE:LGF) is back a the negotiating table with Starz (NASDAQ:STRZA) over an acquisition, reports Bloomberg.
- The company made a serious effort late in 2014 to buy Starz only to be scared off by the deal price.
- LGF spiked late to finish with a 1.4% gain, while Starz also jetted up in the last hour of trading to end +1.8%.
Wed, Jan. 6, 2:36 PM
- Licensing arm Starz Digital (STRZA -1.3%) has a deal with Tubi TV to distribute indie films and TV series on the platform for free streaming.
- Starz Digital manages programming for media companies including AMC Networks and the Weinstein Company; Tubi TV, which now features more than 40,000 titles, boasts investments from MGM and Lionsgate as well as other investors including Cota Capital, Foundation Capital and others.
- The new content (targeted at indie releases rather than hits) will be available on connected platforms including Apple TV, Xbox One, Amazon Fire TV, Roku, and Samsung TVs, along with iOS/Android and the Web.
Tue, Jan. 5, 8:18 PM
- Starz (STRZA -1.4%) is the channel with the pay-TV rights to galaxy-buster Star Wars: The Force Awakens -- and on the cheap, according to The New York Post.
- The channel is paying a bargain $17.5M for the rights, The Post reports, based on an expiring deal with Walt Disney (DIS -2%) that covered movies in theaters through 2015's end.
- Disney has a new distribution deal with Netflix, who likely would have had to pay $40M for the rights, a source says. Starz, meanwhile, usually has to pay about $4M per hour of original programming.
- Netflix does get to stream The Force Awakens -- in Canada, and will pick up later Star Wars films in America.
- “The benefit to Starz is it’s a sleepy brand and it will stir some excitement," says Albert Fried's Rich Tullo. "It’s like having a Super Bowl to launch other programming.”
- Previously: Disney -2.2% as Macquarie downgrades, Cowen sees tougher 2016 (Jan. 05 2016)
Nov. 30, 2015, 5:16 PM
- With its final Hunger Games sequel putting up a "disappointing" run at the box office (lower than last fall's film, but still stellar numbers) and with FBR cutting its price target, Lions Gate (NYSE:LGF) finished down 2.5% today.
- FBR reiterated an overall bullish take, but reduced its earnings estimates, and cut its price target to $38 on sum-of-the-parts valuation. Shares closed at $33.94, implying 12% upside.
- FBR now forecasts that The Hunger Games: Mockingjay Part 2 will top out at $300M in total domestic box office, and earn $240M in profits, down from previous estimates of $380M box office and $315M in profits.
- Together, the final two films in the series should generate $200M in 2016 profits and $100M in 2017, FBR says.
- M&A is still on the table, and FBR's Barton Crockett says tax constraints could delay merger news with oft-cited partner Starz (NASDAQ:STRZA) until early 2016.
Nov. 9, 2015, 8:05 PM
- With the review of Charter Communications' (NASDAQ:CHTR) buyout of Time Warner Cable (NYSE:TWC) proceeding apace at the FCC, the agency is sending requests tied to cable mogul John Malone's holdings not only in Charter but in content companies like Discovery (NASDAQ:DISCA) and Starz (NASDAQ:STRZA), which supply Charter rivals.
- The agency has sent letters to the companies that list Malone as their chairman -- Liberty Media (NASDAQ:LMCA), Liberty Interactive (NASDAQ:QVCA) and Liberty Broadband (NASDAQ:LBRDA), which holds 26% of Charter -- and asked about Malone's influence over those entities as well as the content creators and DirecTV.
- It's a "pretty meaningful request," says BTIG's Rich Greenfield, while Craig Moffett points at the Comcast deal for NBCUniversal in saying that Malone's tangled ownership is "probably not a big issue."
- Malone has a 46.6% voting interest in Liberty Broadband, which would be entitled to vote no more than 25.01% of shares in the new combination, Charter has said. His interests in Discovery and Starz are "minority interests" where he wouldn't control day-to-day decisions.
- The American Cable Association (representing smaller providers) argues that Malone's interests aren't insubstantial and that consumers can expect higher rates unless the FCC imposes conditions on the deal.
- Previously: BTIG: Are TWC, Charter too strong separately to sell merger case? (Nov. 02 2015)
- Previously: Charter call: Talking wireless ambitions, slamming password sharing (Oct. 29 2015)
Nov. 4, 2015, 11:16 AM
- Cable TV networks are sinking in reaction to sharply lowered guidance from Time Warner (NYSE:TWX), which is using its conference call to lower expectations for ratings and subscribers in 2016.
- Disney (NYSE:DIS) was positive earlier but has tumbled 2.6%; Twenty-First Century Fox is off (FOX -4.6%, FOXA -4.9%); Viacom has sunk (VIA -5.2%, VIAB -6.2%); Discovery Communications as well (DISCA -4.3%).
- AMC Networks (NASDAQ:AMCX) is off 3.5% and Starz (NASDAQ:STRZA) down 2.1%.
- Time Warner is now -10% in reaction to its conference call, still ongoing.
- Previously: Time Warner dives 7.9%, cutting 2016 outlook on call (Nov. 04 2015)
- Previously: Time Warner -0.7% early after Q3 beats on strength at HBO, Warner Bros. (Nov. 04 2015)
Oct. 30, 2015, 12:27 PM
- Starz (NASDAQ:STRZA) is off 10% following its Q3 earnings miss yesterday as analysts come in with downgrades and price target cuts.
- Credit Agricole and CLSA lowered ratings by a few notches, setting shares to Underperform from a previous Buy rating.
- Meanwhile, FBR lowered its price target to $40, from $44, and Pivotal reduced its target to $35, from $37. Shares are currently trading at $33.50.
- FBR holds an Outperform rating while Pivotal rates the stock a Hold.
- In an unusual step, Starz commented on the suit filed by former senior VP Keno Thomas (against the company, along with CEO Chris Albrecht, CRO Michael Thornton and Liberty Media) over discrimination claims tied to his firing that also includes allegations that the network wanted him to falsify revenue and subscriber numbers for the company's board.
- “Normally, we would not comment on pending litigation, and, in this instance the company has not even been served,” says a spokesperson. “However, based on reading the complaint in the press, rest assured that Starz, as well as the other defendants cited, will defend themselves vigorously against these scurrilous, unsubstantiated and offensive attacks by a disgruntled former employee.”
- Previously: Starz misses as distribution declines offset network gains (Oct. 29 2015)
Starz is an integrated global media and entertainment company, which engages in video programming and development, production, acquisition and distribution of entertainment content. It provides premium subscription video programming on domestic U.S. pay television channels, global content... More
Industry: Entertainment - Diversified
Country: United States
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