Lionsgate Announces Deal to Spin Off Studios From Starz

Lionsgate has finally pulled the trigger on a long-rumored plan to spin off from Lionsgate. Today, the company announced a Special Purpose Acquisition Company (SPAC) deal that would spin Lionsgate out into its own, publicly-traded entity separate from Starz, according to The Hollywood Reporter. The deal will presumably have some reverberations through Starz itself, as the network had rebranded its streaming service to Lionsgate+ just last fall in markets outside of North America. A full spinoff won’t happen yet, with the SPAC serving more as a kind of “corporate carve-out,” as THR described it, but setting the stage for a breakup down the road.

Lionsgate has a 20,000-title library that includes hits like The Hunger Games and Twilight. Some of their ongoing franchises are the John Wick and Saw movies, with Wick also branching out to a TV spinoff.

According to the THR report, Lionsgate Studios — which includes a TV production unit as well as a film studio — will team with will be combined with Screaming Eagle Acquisition Corp., led by CEO Eli Baker. The new company, Lionsgate Studios Corp., will have  a public offering to generate cash. That should be a winning proposition, because the cost to spin Lionsgate off from Starz was reportedly $4.6 billion, while an appraisal of the company’s library earlier in the year valued the IP at over $5 billion.

The idea here is to provide cash for Starz, and give Lionsgate a chance to sell stock and become independent of the parent company, making each of the two companies healthier. The existing Starz company would continue to control not just Starz itself but a handful of other cable networks they currently own worldwide. Starz currently has 28 million paid subscribers. Lionsgate will retain ownership of some of eOne’s assets, which it purchased from Hasbro earlier this year.

“This transaction creates one of the world’s largest independent pure play content platforms with the ability to deliver significant incremental value to all of our stakeholders,” Lionsgate CEO Jon Feltheimer and Vice Chair Michael Burns told THR in a statement. “Coupled with the acquisition of the eOne platform scheduled to close next week, the expansion of our partnership with 3 Arts and the strong performance of our content slates, we’ve put together all of the pieces for a thriving stand-alone content company with a strong financial growth trajectory.”