Lionsgate CEO Pitches Starz Split to Investors
Lionsgate CEO Jon Feltheimer presented his plans to investors on Thursday, outlining the company’s strategy to separate their film studio from Starz through a Special Purpose Acquisition Company (SPAC) deal. The proposed move would result in the formation of a new entity called Lionsgate Studios Corporation, which will have the ability to raise capital as a publicly traded company.
Feltheimer expressed confidence in their decision, stating, We believe that we selected the best option for aligning with our goal of a full separation, raising capital efficiently with substantial proceeds available to deliver, and establishing an appropriate valuation for our studio supported by blue chip investors.
Under the SPAC deal, Lionsgate’s TV and Motion Picture Groups, along with their extensive 20,000-title library, acquired through the recent purchase of eOne from Hasbro, would be combined with SPAC company Screaming Eagle Acquisition Corp. This consolidation would allow the new entity to capitalize on fresh capital raised through a public listing.
The transaction is set to provide Lionsgate with $350 million in total proceeds, enabling the company to expedite debt reduction and pursue strategic initiatives such as the eOne acquisition. Feltheimer also highlighted an equity investment in talent management and production company 3Arts Entertainment as an opportunity for growth.
Moreover, Feltheimer emphasized that the split would not hinder Lionsgate’s ongoing collaboration with STARZ, as the latter will remain a wholly owned subsidiary of parent company Lionsgate. STARZ will maintain its position as a profitable, premium SVOD platform, focused on a domestic content strategy targeting valuable core demographics. Additionally, it will continue to receive content from the Lionsgate Television and Motion Picture Groups.
Describing the upcoming entity as one of the only pure-play studios in the market today, Feltheimer believes that Lionsgate Studios will possess distinct value. By streamlining its operations and separating from Starz, Lionsgate Studios aims to establish a unique market position and capitalize on the evolving landscape of the entertainment industry.
As Lionsgate seeks to carve out a path forward, this separation presents an opportunity for both entities to thrive individually, leveraging their respective strengths and resources. The strategic move aligns with Lionsgate’s broader vision of growth and provides a platform for further expansion into new avenues of content creation and distribution.
Investors now await the finalization of the deal and the subsequent establishment of Lionsgate Studios Corporation. The separation of Lionsgate’s film studio from Starz signifies a significant step towards building a more focused and efficient entertainment powerhouse, with the ability to adapt and succeed in an ever-changing industry landscape.
