Starz Said to Consider New Options as It Fails to Find Buyer (2)
2014-12-04 21:15:15.579 GMT
(Closes Starz shares in seventh paragraph.)
By Alex Sherman
Dec. 4 (Bloomberg) -- Starz LLC, the pay-TV channel with
more than 50 million subscribers, is considering alternatives to
a sale after reaching out to potential bidders who passed on
making an offer, according to people familiar with the matter.
CBS Corp., Lions Gate Entertainment Corp., AMC Networks
Inc. and 21st Century Fox Inc. were among the companies that
considered buying Starz and didn’t make bids because they
thought it was overvalued, said the people, who asked not to be
named because they weren’t authorized to speak publicly. Offers
for the network, controlled by billionaire John Malone, were due
last month, the people said.
Starz, which has an enterprise value of about $4 billion,
is now considering investments and partnerships with U.S.-based
or European-based media companies in lieu of selling itself,
although nothing will be determined this year, one of the people
said. Any deal would need to have beneficial tax implications
for Malone, the person said. Malone wants to maintain control of
the company, another person said.
Potential buyers considered Starz’s current valuation too
high because of uncertainty around the company’s future
programming, two of the people said. Netflix Inc. acquired
exclusive U.S. rights to Walt Disney Co. movies beginning in
2016 -- films that currently air first on Starz as soon as seven
months after being in theaters.
Future Fears
Without Disney films and amid potential consolidation among
pay-TV providers, buyers feared declining affiliate fee revenue
for Starz, the people said. Starz will earn about $1.90 per
subscriber per month from pay-TV providers in 2015, according to
research firm SNL Kagan, unchanged from this year.
Starz, which owns the Starz and Encore premium channels,
has about 56 million subscribers. Encore customers have declined
for five consecutive quarters, to 33.7 million as of Sept. 30
from 35.1 million.
Starz hired LionTree Advisors LLC earlier this year to seek
potential buyers, people with knowledge of the matter said in
September. The Englewood, Colorado-based company dropped 16
percent to $27.78 at the close in New York, giving it a market
value of almost $3 billion.
Representatives for Starz, CBS, Lions Gate and AMC and Fox
declined to comment.
Malone’s Liberty Media Corp. spun off Starz in January
2013. Malone continues to hold a 46 percent voting stake,
according to an April regulatory filing.
Liberty Media Chief Executive Officer Greg Maffei, who
serves as chairman of Starz, said in September 2012 the network
would be more valuable combined with a media company that
operates other cable channels. More than two years later, no
deal has been struck.
Starz offers a mix of films and original programming. Its
original shows include “Outlander,” a drama based on a series
of novels by Diana Gabaldon, and “The Chair,” a documentary
series about a competition between directors attempting to make
their first feature film.
For Related News and Information:
Starz Said to Hire LionTree to Seek Buyers of Cable Network
NSN NCF9G06TTDSD <GO>
Time Warner Plans HBO Marketing Push to Speed Network’s Growth
NSN NC2QI76S9728 <GO>
Bloomberg Intelligence: BI DVENN <GO>
Top Deal Stories: DTOP<GO>
--With assistance from Lucas Shaw and Anousha Sakoui in Los
Angeles.
To contact the reporter on this story:
Alex Sherman in New York at +1-212-617-8278 or
asherman6@bloomberg.net
To contact the editors responsible for this story:
Mohammed Hadi at +1-212-617-2914 or
mhadi1@bloomberg.net
Elizabeth Wollman, Rob Golum
2014-12-04 21:15:15.579 GMT
(Closes Starz shares in seventh paragraph.)
By Alex Sherman
Dec. 4 (Bloomberg) -- Starz LLC, the pay-TV channel with
more than 50 million subscribers, is considering alternatives to
a sale after reaching out to potential bidders who passed on
making an offer, according to people familiar with the matter.
CBS Corp., Lions Gate Entertainment Corp., AMC Networks
Inc. and 21st Century Fox Inc. were among the companies that
considered buying Starz and didn’t make bids because they
thought it was overvalued, said the people, who asked not to be
named because they weren’t authorized to speak publicly. Offers
for the network, controlled by billionaire John Malone, were due
last month, the people said.
Starz, which has an enterprise value of about $4 billion,
is now considering investments and partnerships with U.S.-based
or European-based media companies in lieu of selling itself,
although nothing will be determined this year, one of the people
said. Any deal would need to have beneficial tax implications
for Malone, the person said. Malone wants to maintain control of
the company, another person said.
Potential buyers considered Starz’s current valuation too
high because of uncertainty around the company’s future
programming, two of the people said. Netflix Inc. acquired
exclusive U.S. rights to Walt Disney Co. movies beginning in
2016 -- films that currently air first on Starz as soon as seven
months after being in theaters.
Future Fears
Without Disney films and amid potential consolidation among
pay-TV providers, buyers feared declining affiliate fee revenue
for Starz, the people said. Starz will earn about $1.90 per
subscriber per month from pay-TV providers in 2015, according to
research firm SNL Kagan, unchanged from this year.
Starz, which owns the Starz and Encore premium channels,
has about 56 million subscribers. Encore customers have declined
for five consecutive quarters, to 33.7 million as of Sept. 30
from 35.1 million.
Starz hired LionTree Advisors LLC earlier this year to seek
potential buyers, people with knowledge of the matter said in
September. The Englewood, Colorado-based company dropped 16
percent to $27.78 at the close in New York, giving it a market
value of almost $3 billion.
Representatives for Starz, CBS, Lions Gate and AMC and Fox
declined to comment.
Malone’s Liberty Media Corp. spun off Starz in January
2013. Malone continues to hold a 46 percent voting stake,
according to an April regulatory filing.
Liberty Media Chief Executive Officer Greg Maffei, who
serves as chairman of Starz, said in September 2012 the network
would be more valuable combined with a media company that
operates other cable channels. More than two years later, no
deal has been struck.
Starz offers a mix of films and original programming. Its
original shows include “Outlander,” a drama based on a series
of novels by Diana Gabaldon, and “The Chair,” a documentary
series about a competition between directors attempting to make
their first feature film.
For Related News and Information:
Starz Said to Hire LionTree to Seek Buyers of Cable Network
NSN NCF9G06TTDSD <GO>
Time Warner Plans HBO Marketing Push to Speed Network’s Growth
NSN NC2QI76S9728 <GO>
Bloomberg Intelligence: BI DVENN <GO>
Top Deal Stories: DTOP<GO>
--With assistance from Lucas Shaw and Anousha Sakoui in Los
Angeles.
To contact the reporter on this story:
Alex Sherman in New York at +1-212-617-8278 or
asherman6@bloomberg.net
To contact the editors responsible for this story:
Mohammed Hadi at +1-212-617-2914 or
mhadi1@bloomberg.net
Elizabeth Wollman, Rob Golum