Jan 14 Starz Entertainment started
trading as its own publicly-traded stock on Monday after Liberty
Media completed the spin-off of the company known for
its premium movie channels late last week.
Shares rose $1.03 or 7.3 percent to $15.23 on Monday.
Liberty announced in August that Starz, which runs eponymous
movie and TV channels as well as Encore-branded movie channels,
will become a separate listed company with about $1.5 billion of
debt. Starz now has a $450 million bank credit facility, the
company said in a statement late Friday.
Analysts view Starz, which competes with HBO and Showtime,
as a potential acquisition target. The Starz channel has 21
million subscribers, while Encore has 34 million subscribers.
Macquarie analyst Amy Yong estimates that HBO, the leader in
premium TV which is owned by Time Warner Inc, has 39.5
million subscribers and that CBS-owned Showtime has 21.3
Macquarie's Yong said in a research note that a large media
company could help improve Starz' margins by "more extensive
distribution, producing more content hours" and by commanding
"higher rates in affiliate negotiations."
Janney analyst Tony Wible called movie channel Epix "an
ideal buyer" for Starz, also in a research note.
Epix is a pay-TV movie channel jointly owned by Viacom's
Paramount Pictures, Metro-Goldwyn-Mayer Pictures and
Lions Gate Entertainment.
ISI analyst Vijay Jayant estimates Starz will generate
revenue of $1.62 billion in 2012 and in 2013. Starz receives
about 80 percent of its revenue from affiliate fees from cable
companies, Jayant said.
In December, Starz did not renew an exclusive agreement to
carry Disney's movies and Netflix swooped in to sign
its own contract with Disney. Starz has been focusing on
developing original programming such as "Spartacus," a drama set
in ancient Rome, and mob drama "Magic City," set in Miami in
Liberty Media, the former parent company of Starz, has been
tweaking its portfolio in recent months. It is close to bringing
its stake in Sirius XM Radio above 50 percent while it
has also been increasing its investment in Live Nation