Fox, Starz in Possible Acquisition Talks

23 Sep, 2014 By: Erik Gruenwedel

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Executives with 21st Century Fox Inc. and Starz reportedly met Sept. 23 to discuss the possibility of an acquisition of the latter’s pay-TV movie and original programing service.

While no deal has been announced or might even happen, the discussions underscore Fox and CEO Rupert Murdoch’s desire to expand distribution into consumers’ homes, according to The Los Angeles Times, which cited sources familiar with the situation.

Fox is coming off an aborted $80 billion attempted acquisition of Time Warner, which Murdoch terminated after becoming uncomfortable with the debt required to purchase the parent of Warner Bros., HBO, TNT and CNN, among other properties.

Acquiring Starz, which has a portfolio that includes the Encore channels and slate of original episodic series, could fetch CEO Chris Albrecht and investors upwards of $3.2 billion based on Starz’s share price of $29.58 Tuesday.

Starz also distributes proprietary and third-party titles (notably The Weinstein Co.) on packaged media and electronically through its Anchor Bay Home Entertainment subsidiary. Indeed, a decline in new disc releases from The Weinstein Co. contributed to Starz reporting an operating loss of $3.8 million during its most recent fiscal period.

Starz, which cut its teeth redistributing movies from Sony Pictures and Walt Disney Studios to multichannel video program distributors, upped its profile when it created landmark digital license deals with Netflix in 2010. Disney subsequently signed its own groundbreaking deal with Netflix for pay-TV rights to the media giant's theatrical releases, which is set to begin in 2017. Sony Pictures re-upped with Starz.

Regardless, Starz’s Albrecht has put the company’s focus on creating original episodic programing, not regurgitating Hollywood movies, a tactic that has paid off both creatively and financially. Indeed, Starz reportedly will spend more than $650 million this year on original programing.

Recent hits include “Black Sails,” “Spartacus,” “Da Vinci’s Demons,” “Magic City,” “Power,” “The White Queen” and “Outlander,” among others.

"I do feel, in 2014, we've really accomplished an important goal, which is having a year-round presence in originals," Albrecht told an investor group earlier this month.

 

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