Starz Adding an Animation Arm

Now the world knows what Liberty Media Corp. chairman John Malone meant when he recently said Starz Entertainment Group would soon be making a move into original programming.

The Denver-based media giant has cut a deal to acquire IDT Entertainment, the content arm of Newark, N.J.-based telecommunications concern IDT Corp. Liberty agreed to give up its 17.2 million shares of IDT Corp. Class B stock, a 5% equity interest in IDT Telecom and $186 million in cash. Liberty will also assume about $91 million of IDT Entertainment’s debt, offset in part by about $55 million in IDT Entertainment working capital Liberty will inherit.


IDT’s share price rose on the news, closing at $12.75 (up $1.60 or 14.3%) last Tuesday.

Liberty first invested in IDT in 2000, before it went public in May 2001. Since then, IDT’s stock price has been as high as $23.80.

Starz will gain the ability to create its own computer-generated animation programming. IDT’s first animated feature film — Everyone’s Hero — The Story of Yankee Irving — is scheduled to be distributed by 20th Century Fox on Sept. 15.

Malone said at Liberty’s May 11 investors meeting in New York that Starz would move more into originals. “We may have something to say on that subject before too long,” he added.

IDT Entertainment includes five other studios that produce live-action and animated programming for television, premium cable and home video — Mainframe Entertainment, Manga Entertainment, Anchor Bay Entertainment, DKP Studios and DPS Film Roman.

Revenue for the unit was about $48.4 million in the fiscal second quarter ended March 31, up 17.8% over the previous year.

In addition to developing and creating programming, IDT Entertainment distributes old TV shows like Roseanne and 3rd Rock From the Sun through Anchor Bay. Anchor Bay also produces the Masters of Horror horror-anthology series for Showtime Entertainment, an agreement that remain intact under Starz.

On closing, IDT Entertainment and Starz will enter into a five-year programming output agreement for the broadcast of some of IDT’s proprietary computer-generated animated theatrical releases and live-action programming on Starz.


Starz senior vice president Tom Southwick said any originals will likely be short-form programming similar to Starz’s current fare, such as the half-hour B-Side show on its StarzinBlack channel and a video and teen soap block on its Encore WAM channel.

“What this does is it puts us in all platforms — theaters, home video, international and we bring to the table cable, satellite, Internet, telco,” Southwick said. “Between the two of us, we’ll have avenues to all of the distribution platforms. It also allows us to play a little bit with windows.

“Traditionally a film debuts in the theater first, then home video, then pay-per-view and then premium,” Southwick added. “It may make sense to switch that around or to have something premiere on six different platforms at once.”