AMC Networks in talks to buy Starz: Bloomberg

16 Sep 2015 | Author: | No comments yet »

AMC Networks Restarts Talks to Acquire Starz.

Starz (NASDAQ:STRZA) is up 7% in after-hours trading on news that it’s in talks to be acquired by AMC Networks (NASDAQ:AMCX), itself up 2.5% after hours.The discussions were reported by Bloomberg, which cited sources who said the two companies had talked a year ago and hadn’t been able to agree on a price and that this round of talk might also not result in a transaction being completed. Bloomberg reported the preliminary talks, which come after a few abortive attempts by suitors to acquire Starz in the past year. “They probably ultimately need to combine with others at least from a bundler point of view, if not from an ownership point of view,” John Malone — Starz’s top individual investor — said last week.

Citing “people familiar with the matter,” the story characterizes the talks as “preliminary” and says the companies have differed over Starz’s valuation. Starz has a market cap of $3.9B and an enterprise value that’s grown to more than $5B from $4B last year, during a period when it was often linked to Lions Gate Entertainment (NYSE:LGF). The companies declined to comment on the substance of the report, but each sought to discredit the story by characterizing it as mere “speculation.” Starz had a market value of $3.9 billion at the end of trading today. Starz, which owns the Starz and Encore premium movie channels, couldn’t come to terms last year with potential buyers, including New York-based AMC Networks, because of differences over valuation, people with knowledge of the matter said last December. It’s controlled by Liberty Media Chairman John Malone who has made it clear that he’d like to find a home for Starz, and in February joined Lionsgate’s board after forging a stock swap deal.

Last year it expanded overseas with a surprising $1 billion acquisition of European network owner Chellomedia — which was owned by Malone’s Liberty Global. This year, Malone obtained a 3.4 percent stake in Lions Gate, the independent film and TV studio run from Santa Monica, California, in exchange for a stake in Starz. AMC Networks was spun off in 2011 from Cablevision Systems Corp., which the Dolans also control. “I obviously am a fan of Lions Gate,” said Malone, who added it would be a “terrific, synergistic fit” to see Starz combine with Lions Gate. “But that’s not under my control.

He’s also the biggest shareholder in Charter Communications, which is in the process of buying Time Warner Cable, which has the Manhattan cable franchise. “We’ve operated in an environment on the multichannel video retail side that’s been consolidating space for a decade,” he told us. “During that period of time, and during the last four years since we’ve spun [from Cablevision], our channels have increased in importance at the size that we are. AMC Networks has long been viewed as a potential acquisition target for media companies because of its limited scale, owning the AMC channel, IFC, SundanceTV, WE TV and half of BBC America. A deal for Starz would give the company added clout in negotiations with pay-TV providers, many of which are experimenting with skinny bundles that exclude less popular channels.

AMC Networks’ $5.3 billion market valuation has been aided by a run of hit shows, both with audiences and with critics. “Fear The Walking Dead,” a spinoff of its hit show “The Walking Dead,” drew the largest-ever audience for a new cable series with 10.1 million viewers last month.

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