Entertainment

Lionsgate A Prime Takeover Target In Media M&A – Deadline


Lionsgate CEO Jon Feltheimer mentioned Thursday that two media merger offers in as many weeks are “resounding affirmation of the value of content, IP and brands,” however that the corporate needs to maintain its head down and “not get distracted by this concept of scale.”

“Obviously we will talk to everyone, we listen to everything,” he mentioned on a convention name following strong quarterly earnings — whilst Lionsgate is taken into account the almost definitely to be scooped up subsequent if, or, extra possible, as, a wave of consolidation within the sector continues.

The firm’s shares mirror that, in addition to solid growth in Starz subscribers and throughout its portfolio. The inventory’s risen steadily since AT&T introduced plans to shed WarnerMedia in a $43 billion deal with Discovery and thru yesterday’s information that Amazon will acquire MGM for $8.45 billion. Lionsgate shares closed right this moment up 1.3% at $18.66 and gained one other 2% or so in late buying and selling after the earnings.

“Mergers come in waves. There have been constant waves. The waves are gapped father and father apart, but they are bigger and bigger because there are fewer and fewer companies,” mentioned Neil Begley, SVP of Moody’s Investor Services, who has been following the sector because the Eighties. “Lionsgate looks a lot like MGM. It’s got one of the leading libraries out there” with franchises together with Saw, Hunger Games and John Wick.

Amazon CEO Jeff Bezos mentioned his deal was a easy operate of MGM’s “vast, deep catalog of much beloved intellectual property.” Amazon will use the content material to energy Amazon Prime Video, which helps energy the engine Amazon Prime.

In AT&T’s case, the telco, which must spend tens of billions of {dollars} on spectrum and rolling out 5G, balked on the content material funding required to make HBO Max aggressive.

Together, the offers mirror a shift within the aggressive panorama, on this case a pivot to streaming. Similar shifts have resulted in waves of offers from when Sony purchased Columbia Pictures in 1989 and Matsushita purchased MCA/Universal in 1991. Both have been {hardware} corporations trying to get into software program. One deal lasted, one didn’t.

Today, “Everyone has realized they have to get bigger in streaming, so they need content,” mentioned Alan Gould of Loop Capital. And they want extra content material, whilst much less and fewer is on the market as studios hold it or claw it again as quickly as doable to feed sister streamers.

NBCUniversal father or mother Comcast can also be mentioned to have courted MGM however backed out when the value levitated from round $6 billion to over $8 billion. It’s ironic as a result of Comcast has historical past with MGM. It acquired the studio together with Sony and a number of other non-public fairness companies in 2004 from then-owners Kirk Kerkorian, producer Frank Mancuso and Australia’s Seven Network. MGM, which had half a dozen house owners earlier than that, was overleveraged and filed for chapter in 2010.

“Comcast could have stepped up, tried to turn it around,” Begley mentioned. In equity, although Netflix had began, streaming was not a giant factor then. Traditional media wouldn’t bounce on for an additional decade.

The excessive value Amazon paid, as everybody has identified, is as a result of it has a special calculus referred to as Prime. (Apple has additionally kicked some studio tires on behalf of Apple TV+.)

Gould referred to as Lionsgate so engaging to potential patrons as a result of it’s a “free radical” and a digestible measurement. He estimates it could be value not less than $8 billion, or $31 a share. It has a 17,000-title library, Starz, and is a number one impartial producer.

In a word earlier this week, he valued Starz at $5.9 billion and the legacy movie and TV companies at $5.1 billion (the $8 billion comes after subtracting overhead and debt).

Nor is Lionsgate is burdened with primary cable networks, which some see as a legal responsibility for an additional free radical, AMC Networks.

Going larger, Loop places an enterprise worth on ViacomCBS of $42 billion, making it more durable to swallow. It might be a purchaser or merge with one other like NBCUniversal. Wall Streeters have famous appreciable antitrust points in that case that must be resolved because the mixed entity would personal two broadcast networks.

What are the comparatively few corporations within the combine saying?

Sony Corp. has been pressured on and off over time to promote its studio. CEO Yoshida Kenichrio instructed the Financial Times this week that it’ll not.

Comcast chief monetary officer Mike Cavanaugh instructed buyers at a digital media convention Wednesday, as Amazon-MGM was happening, that “It’s our job to consider anything that could be possible to be smart and add value [but] we like the assets we have.”

“Obviously people talk about scale in the media business these days … but I think what’s underestimated is execution,” he mentioned, “and we feel very good about that.”

Disney CEO Bob Chapek and ViacomCBS CFO Naveen Chopra instructed the identical convention (an occasion placed on by J.P. Morgan) on Monday that they’re centered on rising their respective companies, pleased with their aggressive positions and don’t want offers.

Disney well bulked up already with Pixar, Lucasfilm and Marvel and topped that off by shopping for the leisure belongings of Fox. Disney+ can also be approach forward among the many new crop of streamers.

Begley of Moody’s famous that offers with ViacomCBS, Comcast and AMC Networks would all need to be “friendly” as a result of they’re managed corporations (by, respectively, Redstones, Roberts and Dolans).

Lionsgate doesn’t have a controlling shareholder. Nor will the brand new mixed WarnerMedia-Discovery when that’s set to shut mid-next 12 months.

FOUR DECADES OF MEDIA DEALS

Eighties

1986 – Capital Cities buys ABC

1989 – Sony buys Columbia Pictures

Nineteen Nineties

1990 – Warner Communications and Time merge

1991 – Matsushita buys Universal father or mother MCA

1994 – Viacom buys Paramount

1994 – Viacom buys Blockbuster

1995 – Seagram buys Universal/MCA from Matsushita

1995  – Westinghouse buys CBS

1996 – Disney buys Capital Cities/ABC

1996 – Time Warner and Turner Broadcasting merge

1997 – Westinghouse sells its energy and lightweight bulb companies and adjustments title to CBS

1998- AT&T buys John Malone’s TCI cable

1999 – Viacom buys CBS

2000s

2000 – AOL buys Time Warner

2001 – Vivendi buys Seagram

2001 – Vivendi buys Barry Diller’s USA Networks

2001 – Comcast buys AT&T Broadband

2003 – Vivendi creates NBCUniversal by combining the studio with GE’s TV biz led by NBC

2004 – Comcast tries unsuccessfully to purchase Disney

2011 – Comcast buys 51% of NBCUniversal

2013 – Comcast buys remainder of NBCUniversal

2014 – AT&T acquires DirecTV

2015 – Charter Acquires Time Warner Cable

2017 – Disney acquires Fox (outbids Comcast, which buys Sky)

2018 – AT&T acquires Time Warner

2021 – AT&T sells a part of DirecTV

2021- AT&T sells WarnerMedia

2021 – Amazon buys MGM



Source Link – deadline.com

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