US: Lions Gate may spin off Starz

The company is looking to reduce its hefty debt load and allow shareholders to invest directly in either of the businesses, the people said.

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The movie and television production company has been in discussions to separate the two entities through a variety of means, including a sale, spinoff or special-purpose acquisition vehicle, the people said. No final decisions have been made, and the discussions remain fluid, said people familiar with the deliberations.

Starz is best known for its original series, including “Power” and “Outlander,” both of which have strong followings. But this summer, AT&T’s DirecTV unit cut the amount it pays Lions Gate to carry Starz and Encore during a renegotiation, and Comcast is considering dropping both channels from its premium channel packages when the deal expires at the end of the year, people familiar with the matter said.

The potential loss of the estimated US$225 million contract with Comcast would be a severe blow to Lions Gate, which took on new debt earlier this year and had roughly US$200 million in cash as of June 30.

Full Content: The Wall Street Journal

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