UPDATE 2-Film studio Lionsgate to buy Starz for $4.4 bln

Thu Jun 30, 2016 2:16pm EDT
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(Adds background, quotes from CEO, analyst)

By Liana B. Baker

June 30 (Reuters) - Lions Gate Entertainment Corp, the film studio behind the Hunger Games movies, said Thursday it would buy premium television network Starz for $4.4 billion in cash and stock, in a deal that would unite two media companies with ties to cable mogul John Malone.

Both companies held on and off talks for some time. The long-anticipated deal will help diversify Lionsgate's business and make its financials less dependent on whether it can deliver a hit movie, according to Jefferies analyst John Janedis.

Lionsgate Chief Executive Jon Feltheimer said on a conference call that the deal creates a "global content powerhouse that invests nearly $2 billion a year in new content."

Starz, which competes with HBO and Showtime, also develops original programming such as the fantasy series "Outlander."

Lionsgate's bet on a cable network comes with risks, however, as more viewers watch television online and buy fewer cable subscriptions.

"It also increases exposure to the premium cable network business, which faces challenges of its own in a more fragmented media landscape," Janedis said.

Lionsgate will pay $32.70 per share for Starz, representing a premium of nearly 16 percent to Starz's closing price Wednesday.   Continued...