Stocks of media companies that own cable networks jumped in early Thursday trading following the acquisition of Starz by Lionsgate.
The Starz buy could be a signal that further consolidation is on the way in the programming business. The distribution side of the pay-TV industry is already highly concentrated.
Starz stock rose more than 11% after Lionsgate’s $4.4 billion buyout bid was announced.
Also showing sharp rises were other small- to mid-sized network operators. AMC Networks was up more than 5%, Discovery was up more than 3% and Scripps Networks Interactive was up nearly 3%.
John Malone, who holds stakes in Discovery in addition to Lionsgate and Starz, has labeled companies like AMC and Scripps as “free radicals” that would probably be better off as part of a larger company.
Other media stocks rose as well. CBS was up more than 2% and Time Warner and Viacom weren’t far behind.
TV stock have been under pressure because of the threat cord cutting poses to distribution revenue. Lately the ad market has been hot, but growth is still expected to be moderate at best because of eroding ratings.
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