Yesterday, Starz Entertainment LLC, a wholly-owned subsidiary of Liberty Media Corp. (LMCA) launched its two TV Everywhere services with Cox Communications Inc. The two online authenticated services are known as STARZ PLAY and ENCORE PLAY. The company will also launch its third streaming services called MOVIEPLEX PLAY with Cox in near future. These three services together will offer 1,500 premium movies and TV programs every month.
Initially, STARZ PLAY and ENCORE PLAY will be available through Internet and Apple Inc. (AAPL) developed several devices such as, iPhone, iPAD, and iPod through Wi-Fi and wired broadband connections. However, Starz stated that mobile connectivity, access through gaming consoles and availability of these services on Google Inc. (GOOG) developed Android-based devices will be launched later on. Furthermore, management is trying hard to enter into similar types of deals with other large pay-TV operators.
Liberty Media has already decided to spin-off its Starz entertainment segment as a separate entity by the end of 2012. According to management, the spin-off of Starz will unlock the latter’s value by optimizing its capital structure and enabling Starz to find several alternative ways and partnerships for both content creation and distribution. At the end of second-quarter 2012, total subscribers base of Starz increased 9% to 20.7 million while its sister TV channel Encore had 34.2 million subscribers, up 4% year over year.
The spin-off is envisioned to provide a cash dividend of $1.8 billion to Liberty Media. We believe the spin-off of Starz will help Liberty Media to increase its stake in Barnes & Noble Inc. (BKS) and Live Nation Entertainment Inc. (LYV), together with SIRIUS XM Radio Inc. (SIRI).
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