Lionsgate Has Started Talks To Sell Epix Stake – Report
Now that it has completed its acquisition of Starz, Lionsgate has kicked off the process to sell its 31.2% stake in Epix to the joint venture’s other partners, MGM and Viacom, Reuters reports.
It has “initiated talks” the news service says, citing “people familiar with the matter.”
Valuation will be key. Brean Capital’s Alan Gould figures Lionsgate’s stake is worth about $458 million.
Analysts have expected Lionsgate to leave the Epix partnership after it agreed to pay $4.4 billion for Starz. But execs played coy when asked about the possibility.
At an Investor Day gathering this month CEO Jon Feltheimer said Epix “is very valuable and throwing off cash.” Lionsgate and partners Viacom and MGM will “realize the value which ever way we all decide is best for our companies.”
He later quipped that Lionsgate will “treat Starz just like any other third party customer that we paid $4 billion for.”
But it hasn’t been clear whether Viacom, which must reduce its debt, would be willing to buy a larger stake in Epix. Indeed, this month Stifel Research’s Ben Mogil said that a sale of Paramount’s Epix stake to Lionsgate might fetch $750 million making it a “very viable solution to recapitalize the studio” and “focus on wholly owned assets.”
Lionsgate in Talks to Sell Epix Stake to MGM, Viacom
Lionsgate is in talks to sell its 31% stake in the premium cable channel Epix to its partners in the venture, MGM and Viacom.
Lionsgate had previously signaled its intention to divest its stake in Epix, which launched as a joint venture of the three studios in 2008, following its acquisition last month of premium cable group Starz. News of the formal talks beginning was first reported Thursday by Reuters.
Viacom owns the largest share of Epix at around 49% while MGM has the smallest interest. Epix was formed at a time when Viacom, MGM and Lionsgate opted to launch their own pay TV outlet after ending their respective output deal relationships for theatrical features with Showtime. Epix carries the theatrical output of the three studios, and last year it accelerated its push into original series with the launch of the spy drama “Berlin Station” and Nick Nolte comedy “Graves.”
Lionsgate CEO Jon Feltheimer acknowledged that the studio was likely to make a change in its Epix partnership after it set the initial agreement to buy Starz.
“The fact of the matter is, at 31 percent, Epix is not a truly strategic platform for us,” Feltheimer told Wall Street analysts in June.
There had been speculation that Epix might be bought out entirely by Viacom or sold by the three partners to another buyer entirely.
Lionsgate and MGM declined comment. A rep for Viacom could not immediately be reached for comment.