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Lionsgate to focus on spinoff of studio business, rebrands Starz outside of US

Lionsgate has decided to focus on spinning-off its studio business as it renames its StarzPlay streaming platform as Lionsgate+ in 35 markets outside the U.S.

“Despite the volatile market environment, Lions Gate Entertainment Corp. remains on a path to separating our Starz and studio businesses. As negotiations progress, we have increased our focus on the possibility of spinning our studio business, creating a number of financial and strategic benefits,” Lionsgate said in an SEC filing on Wednesday.

“In that regard, we are continuing productive negotiations with prospective strategic and financial partners on both sides of our business,” the studio continued as Lionsgate and Starz are still expected to operate as separate, yet aligned in strategies, at the end of the current sales process.

Lionsgate also announced that Starz will rebrand as Lionsgate+ in 35 countries, and with a new brand look from Sept. 29.

Lionsgate has been exploring its options for Starz, including a possible separation of the pay TV and streaming business and its studio operations. The goal appears to be creating two standalone companies so investors can value the Starz and studio assets separately.

And while some potential suitors appear to see Starz as a streaming platform, others are looking at Lionsgate and its programming library as a possible indie studio acquisition as digital titans like Apple and Amazon muscle into Hollywood.

Lionsgate is touting its 17,000-strong programming library as difficult to replicate and an appealing target for a bigger media player looking to bolt on an indie studio. And despite volatile financial markets, the entertainment industry has seen a recent spate of mergers and acquisitions as major players dive into the streaming space and indie studios get bought up for scale and content.

That leaves Lionsgate — after the spinoff-merger of AT&T’s WarnerMedia division with Discovery and Amazon’s acquisition of MGM Studios — betting it now has a takeover target on its back, even as it has been exploring its options for Starz. The studio would then look to take advantage of increased potential demand for shares of the spun-off studio as film and TV content is prized and spinning the studio rather than Starz would offer a number of strategic and financial benefits.

Whatever the transaction that may result from current negotiations held by Lionsgate, a likely separation of the pay TV and streaming business and its studio operations will result. Starz is a pay TV channel similar to HBO and Showtime, and also offers a streaming service. Its programming includes the Power franchise, Blindspotting and Hightown. Lionsgate acquired Starz in 2016 for $4.4 billion.

The rebrand of Starz as Lionsgate+ will not take place in the U.S. and Canada where the streaming platform will retain its Starz brand. Brand names for Starzplay Arabia along with south and southeast Asia’s Lionsgate Play will also remain in place.

“Operating under Lionsgate+ internationally brings a distinct and differentiated identity in an increasingly crowded international marketplace and builds on the brand equity in the Lionsgate name that our extensive research has proven is strong around the world. Even with the separation of Starz and the Lionsgate studio business, the Lionsgate brand will continue to be valuable to the ongoing success of our international platform,” Jeffrey Hirsch, President and CEO of Starz, said in a statement. The Hollywood Reporter

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