Shares of Starz (STRZA) plunged 16.3% yesterday, after a buzz about its failure to find a potential buyer hit the market. The company is now looking for other alternatives, including any alliance. The provider of Starz and Encore premium-TV channels was spun off from Liberty Media Corp. (LMCA) in Jan 2013 with the intention to unlock the stock’s hidden value.
Analysts believe that CBS Corp. (CBS), Lions Gate Entertainment Corp. (LGF), AMC Networks Inc. (AMCX) and Twenty-First Century Fox, Inc. (FOXA) were interested in adding this media and entertainment company to their portfolio. The addition of Starz to CBS Corp., which owns Showtime, would have placed the latter in a better position to compete with Time Warner Inc.’s (TWX) HBO.
Starz, which has over 56 million subscribers, was seeking to raise $5 billion through a buyout. However, industry experts hinted that potential bidders, in addition to finding Starz overvalued, were uncertain whether the company has enough original programming to offer.
According to sources, in Sep 2012, Greg Maffei, the CEO of Liberty Media as well as chairman of Starz had stated that the network would gain if it became part of a larger media company, operating cable channels. However, since then, this Englewood, CO-based network, controlled by billionaire John Malone, has not been able to enter into any strategic deal.
We believe Starz’s management would have to make their asking price appear compelling in order to instigate media companies to approach them about striking a deal. Starz, which operates through Starz Networks, Starz Distribution and Starz Animation, currently carries a Zacks Rank #3 (Hold).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
To read this article on Zacks.com click here.
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment