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Starz to Become Separate Company

8 Aug, 2012 By: Erik Gruenwedel

Liberty Media Corp. Aug. 8 said it will spin off Starz LLC later this year into a separate publicly held company.

Starz LLC, which includes Starz Entertainment, offers 17 premium channels including the Starz and Encore brands with approximately 20.7 million and 34.2 million subscribers, respectively. Starz Entertainment airs more than 1,000 movies and original series every month across its pay-TV channels.

Starz original programming includes “Magic City,” "Boss" and the “Spartacus” franchise, among others. Anchor Bay Entertainment distributes Starz home entertainment releases.

Liberty said it would saddle Starz with about $1.5 billion in debt and an undetermined amount of cash following the spin-off.

“This transaction will provide better transparency on the Starz operating business; optimize the Starz capital structure; permit us to better pursue our strategic objectives, including creating two currencies that could be used for acquisitions; and create significant liquidity at Liberty Media, which preserves all our options with respect to SiriusXM and Live Nation,” Liberty CEO Greg Maffei said in a statement.

Meanwhile, Starz reported second-quarter (ended June 30) operating income of $108 million, which was down 8% from operating income of $120 million during the previous-year period. The decrease was primarily as a result of a decrease in the Starz Channels business, due to an increase in programming expenses associated with the mix of Starz original programming content. Starz’s revenue remained unchanged at $403 million.

“The senior Starz team and I are very energized by the decision to make Starz its own independent company,” Starz CEO Chris Albrecht said in a statement. “I believe this stand-alone structure is the first step to unlocking the real potential growth opportunities for our businesses.”

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