Lionsgate said the earlier announced sale of its Starz premium programming service should be sorted out next month and that the deal could expand to include the broader studio.
In a 10-K filing to the SEC, the Canadian entertainment conglomerate said that it agreed to pay $191.4 million for 200 films and an 18.9% preferred equity interest in production company Spyglass Media.
With that added heft, Lionsgate CEO Jon Feltheimer used the opportunity of his company's Q2 earnings report Thursday to pitch a bigger sale beyond just Starz. As Feltheimer sees it, Lionsgate's film library is superior to that of MGM, which Amazon paid $8.5 billion to acquire in March.
Also read: Lionsgate Says Starz Should Be Spun Off By the End of Summer
"Our library is better than the MGM library. Our library is newer, fresher than the MGM library,” Feltheimer said.
The executive confirmed in May that Lionsgate is looking to sell all or a piece of Starz, with interested potential bidders including Vivendi unit Canal+, the duo of Roku and private equity firm Apollo Global Management, and pay TV company DirecTV.
In the second quarter, Starz added 1.8 million subscribers globally, as well as 700,000 domestically, to reach 26.3 million.
The Spyglass purchase, however, makes the broader LIonsgate portfolio more appealing at a recessionary time during which big streaming companies still need more content than ever, but don't want to pay to produce it themselves.
Included in the Spyglass portfolio are recent Quentin Tarantino titles Inglourious Basterds, Django Unchained and The Hateful Eight, which were acquired from the bankrupt Weinstein Company several years ago. According to the Hollywood Reporter, Paddington, Fruitvale Station, The Kings Speech and Silver Linings Playbook are also in the bin.
Those movies will be added to a Lionsgate library which includes more than 17,000 film titles and drove $749 million in revenue in the last year.
“When you see a lot of the big streamers obviously moving into new territories, they need a lot of content. And, frankly, it’s expensive to make new content,” Feltheimer said.
Still, Lionsgate is exposed to the recessionary winds -- it lost $122 million in the most recent quarter, an uptick from the $51 million it lost in April-June 2021. Revenue dipped to $894 million from $901 million the year before.
Now seems like a good time to sell?
“The structure that we’re considering has become broader,” Lionsgate Vice-Chairman Michael Burns said. “And even in a separation, some of our potential partners have expressed interest in both the studio and Starz and, as always, our priority is to create significant shareholder value.”
