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Starz Stock Attracts Acquisition Target Talk

Premium network Starz crossed the one-year mark as a publicly traded company last week, enjoying a 112% lift in its stock price over the past 12 months and refueling speculation that it could be an M&A target for a larger network.

Starz went public on Jan. 14, 2013, completing a complicated spinoff from Liberty Media and debuting on the NASDAQ Exchange at $14.15 per share. Since then, the stock has more than doubled to $29.98 per share as of Jan. 15. While investors have enjoyed the run, they could be even more optimistic now that the premium network is a more attractive target.

The real issue around a Starz acquisition was that potential suitors wanted to wait at least a year before considering a bid to make sure the acquirer wasn’t responsible for any tax issues around an acquisition, according to Pivotal Research Group principal and senior media & communications analyst Jeff Wlodarczak.

“I think the odds of a deal have gone up quite a bit,” Wlodarczak said.

While no deals are imminent, possible suitors include AMC Networks; CBS, parent of premium channel Showtime; Viacom; or Twenty-First Century Fox.

Starz has been considered to be a takeover target ever since the Liberty split, and though the premium network has drawn some interest, it hasn’t been compelled to do a deal.

“They’re investment bankers of every shape, color and size who have come to talk to us about their best ideas,” Starz CEO Chris Albrecht said at the Goldman Sachs Communacopia conference on Sept. 24. “We listen to those ideas, and there hasn’t been anything yet that seems to make sense to us. But if something comes along, in the meantime, we look at investing in our business and using our cash to strengthen that business.”

In the meantime, Starz has focused on beefing up its original programming. At the recent Television Critics Association get together earlier this month, Albrecht reiterated plans to air 75 hours of originals by the end of 2015, putting it in the same class as Home Box Office and Showtime, and to forge new marketing partnerships. The premium service has increased its subscriber base to about 22 million — still lagging HBO’s 28.7 million U.S. subscribers — on the heels of recent promotions with Time Warner Cable and Charter Communications.

TAKEAWAY
Having enjoyed a 112% lift in share price since going public a year ago, premium network Starz is drawing the eyes of potential acquirers.