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, 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, 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.
Mon, Jun. 27, 5:23 PM
- Starz (STRZA -2.6%) has signed a new employment deal with CEO Chris Albrecht to keep him around through 2020.
- Albrecht will become president as part of the move. He'll get an annual base salary of $1.5M, a target cash bonus of 150% of $1.375M for 2016 and 200% of base salary for 2017 and beyond.
- According to the company's SEC filing, he'll also get an annual equity grant of $7.25M, in 50% stock options, 25% restricted shares and 25% PRSUs.
- 8-K filing
Thu, Jun. 23, 12:07 PM
- Starz (NASDAQ:STRZA) has jumped 5.4% in recent minutes amid chatter that there are new talks of a tie-up with Lions Gate Entertainment (NYSE:LGF).
- Lions Gate is up 3.2% in recent minutes as well. Sources tell TheStreet that talks are back on after cooling in the fall.
- The stocks had gotten a boost in October amid speculation that the two could tie up and unite a pair of interests by cable mogul John Malone. Lions Gate has a 15% voting stake in Starz.
Thu, Jun. 2, 7:36 PM
- Glenn Curtis, president of Starz (STRZA +2.1%), is set to retire after a long stretch at the company, effective July 1.
- He was named president in 2013; he'd also served as executive VP and chief financial officer from 2006-2012, and had come from Starz parent Liberty media where he worked for several years on the Starz Encore Group.
- His separation will include a lump sum of $828,750 and monthly payments ending Dec. 31, 2017, making up the difference between his monthly base pay and what he might get from another employer.
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
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 »
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%.
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. 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)
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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