One of the most-anticipated mergers in Hollywood has come to fruition after nearly a year of whispers, as film studio Lionsgate has inked an agreement to purchase Starz for $4.4 billion in cash and stock, according to Variety.
The cable channel has been on the rise in recent years, with original series like Outlander and Power fueling higher viewership as the company looked to diversify from its previously film-focused holdings.
The merger will spur a stark increase in investment in new film and TV content from Lionsgate, with the combined company estimated to invest $1.8 billion annually into new shows and films, according to a conference call Lionsgate held with investors Monday.
“Studios have talked about going direct to consumers but this is finally a big move in that direction,” Mike Goodman, an independent consultant with Strategy Analytics, told Digital Trends about the merger.
The deal with Lionsgate comes after investor Jon Malone, previously the majority shareholder in Starz, purchased a significant stake in Lionsgate with personal assets last year. Malone will trade his Starz stock for a combination of voting and non-voting shares in Lionsgate.
“This transaction unites two companies with strong brands, complementary assets, and leading positions within our industry,” said Lionsgate CEO Jon Feltheimer.
Long-term, the merger will probably impact Lionsgate’s current co-ownership of Epix, a cable company it purchased jointly with Viacom and MGM. The channel has been Lionsgate’s cable home for film distribution for seven years, and though a shift to Starz is anticipated eventually, executives tell Variety that for the time being the nature of the Epix relationship will not change.
“[Starz CEO] Chris Albrecht and his team have grown Starz into an industry leader that provides highly-rated and diverse content, drawing critical claim and brand recognition for Starz,” Starz Chairman Greg Maffei said. “Together, Lionsgate and Starz form an entertainment powerhouse with a world-renowned studio that produces blockbuster movies and channels with must-have programming that will be able to capitalize on content opportunities across multiple platforms.”