Lions Gate Entertainment Corp. jumped after saying it’s likely to announce a deal to spin off or sell a piece of its Starz cable network in September, with potential partners also showing interest in the company’s film and TV studios.
Shares surged 11% to $10.71 at 10:10 a.m. in New York, valuing the media company at about $2.3 billion.
Lions Gate has been working with advisers this year to sell a stake in Starz, known for shows like “Power” and “Outlander.” Executives have argued that Wall Street is undervaluing the company in its current structure. Lions Gate is one of the last remaining independent studios after tech giants and larger companies snapped up its competitors.
“The structure that we’re considering has become broader,” Lions Gate Vice Chairman Michael Burns said on an earnings call Thursday. “As always, our priority is to create significant shareholder value.”
The $8.5 billion sale of Metro-Goldwyn-Mayer to Amazon.com last year helped spur interest and give possible buyers an idea of the studio’s value, executives said. Around the same time in 2021, AT&T Inc.’s WarnerMedia and Discovery Inc. also announced a merger, leaving some to speculate media companies needed to be bigger to remain competitive.
Lions Gate Chief Executive Officer Jon Feltheimer said his team was planning to “keep our head down” and focus on making good movies and TV shows.
Lions Gate reported earnings for the first fiscal quarter of 2023 that came close to analyst estimates. The company lost 23 cents a share, better than the 27-cents-a-share loss analysts expected. It generated $893.9 million in revenue, just short of Wall Street expectations.
The company’s film studio is known for productions like “Knives Out” and the “John Wick” series.
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