Movie studio Lionsgate has announced that it will officially acquire cable channel Starz in a long-anticipated merger to bolster both companies’ media outreach.
Lionsgate is one of the last few standalone movie studios not part of a larger conglomerate, and the powerhouse behind hit franchises like the Hunger Games films, Mad Men, and Orange is the New Black. The flagship Starz cable channel, which plays host to popular show Outlander, has 24 million U.S. subscribers, while Starz Encore has 32 million subscribers.
The merger is the end result of a long and slow courtship between the two companies, which began to speed up last year after a stock swap gave each company voting rights for the other and granted top Starz shareholder John Malone, a man with a long shadow in the cable world, a seat on the Lionsgate board of directors.
“The combination of Lionsgate and Starz brings significant scale to our portfolio of content and distribution assets and will enable us to compete successfully in today’s rapidly evolving global entertainment marketplace,” said Mark H. Rachesky, Lionsgate’s chairman. “This strategic transaction positions us extremely well to unlock the underlying value of our content to create substantial lasting value for our shareholders.”
“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,” said Starz chairman Greg Maffei in a statement.
The merger will no doubt benefit both companies in an era where the movie and cable industries are changing faster than ever. This year has been particularly tough across the board; only 11 companies went public in 2016’s first quarter, down 71% from last year and 69% from the previous quarter.
In recent days leading up to the anticipated announcement, Starz’s shares have increased by 9%, and Lionsgate’s by 8%. The 4.5-year deal officially goes into effect July 1.