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Lionsgate ‘mulling Starz spin-off’ to reduce debt

Starz’ The Spanish Princess

Lionsgate is mulling spinning off premium cable offering Starz into a separate company as it looks to reduce its debt load. 

According to The Wall Street Journal, a spin-off is among a number of options the studio is considering for the Outlander and American Gods channel, which it purchased for US$4.4 billion in 2016.

Others include putting Starz up for sale or placing the channel into a special-purpose acquisition company (SPAC) that could then yield a public company, which could help to offload some of Lionsgate’s close to $3bn debt load.

Starz’s future with Lionsgate has been the subject of much speculation since last spring, when the studio reportedly held talks with CBS about a sale. The Eye is believed to have put up a US$5 billion offer for Starz, which was turned down.

A potential sale or spin-off comes amid a bleak financial period for Lionsgate, whose stock has suffered in the last year. Shares are currently hovering around the US$8.95 mark, compared to this period last year, when they were almost cracking US$25 a share.

Starz, however, has been the jewel in Lionsgate’s crown, with a thriving OTT service that is fast expanding globally. The business, which is expected to turn a profit in 2023, will be in 51 countries by the end of the year, and has kept afloat abroad with a robust content offering despite ramped-up SVOD competition.

Lionsgate boss Jon Feltheimer said earlier this year that the “international market is a US$45 billion opportunity for us that will result in between 15 million and 25 million new Starzplay international subscribers by 2025”.

In September, Starz handed its chief operating officer Jeffrey Hirsch a new long-term deal naming him CEO at the network.

Hirsch had been in charge of Starz since March, after former boss Chris Albrecht revealed he was stepping down from the CEO role after almost a decade with the company.