Benzinga | Nov 5, 2021 11:45AM EDT

Lions Gate Entertainment Mulling Possible Starz Spinoff: Report

Lions Gate Entertainment Corp. (NYSE: LGF-A) is exploring the spinoff of its media networks, including the Starz channel.

What Happened: According to a Bloomberg report citing a company filing, the board of directors has authorized a study of potential capital markets alternatives that include either a partial or full spinoff of its media networks or an issuance of trading stock.

Lions Gate acquired Starz in 2016 as a premium cable network for $4.4 billion. And while the network has scored with popular series including "Outlander" and "Power," it is now competing in an environment that is increasingly dominated by well-financed streaming services including the Walt Disney Co.'s (NYSE:DIS) Disney+ and Netflix Inc (NASDAQ:NFLX).

Related Link: Disney To Shut Down ESPN Classic

Why It Happened: Lions Gate's media networks unit has approximately 30 million subscribers. Other assets include MoviePlex and the Asian-focused Celestrial Movies, CHK, KIK and Thrill.

But the media networks have underperformed financially. In the company's third-quarter earnings report released yesterday, the media networks' revenue of $384.7 million was down from $388.3 million one year earlier, while the segment's $5.5 million profit was substantially lower than the $92.9 million in third-quarter 2020. The company attributed that drop to a "higher cadence of programming and content spend and marketing costs."

Lionsgate CEO Jon Feltheimer did single out Starz for praise in the third-quarter earnings report, citing how it "drove growth of 1.3 million global streaming subscribers with the strong premieres of three new series in the quarter."