Lionsgate, Starz File Prospectus to Separate
Lionsgate has taken another step towards a proposed separation of its studio operations from Starz, its pay TV and streaming business.
On Wednesday, the Hollywood studio disclosed the public filing of a Form S-4 registration statement with the U.S. Securities and Exchange Commission around the long-awaited separation of its studios business, to be called Lionsgate Studios Corp., and its media networks business, mainly Starz.
The SEC filing offers a joint proxy statement and prospectus that calls for Lionsgate’s studios business, known as LG Studios, to formally split from Starz to produce two separately traded public companies. The first, LGEC, will be renamed Starz Entertainment Corp., and New Lionsgate will be called Lionsgate Studios Corp.
Earlier, Lionsgate spun off its film and TV studios business in a Special Purpose Acquisition Company (SPAC) to create a separately traded public company, with an eye to a formal separation from Starz down the road. That allowed Lionsgate Studios to launch as a standalone company with a listing on NASDAQ, with its biggest assets being a vast library of movies and television franchises.
The SPAC transaction was structured with the parent company retaining 87.3 percent of the shares in Lionsgate Studios, while the blank check company, Screaming Eagle Acquisition Corp., controlled the remaining 12.7 percent equity stake.
The Hollywood studio has been exploring its options for Starz, including the formal separation of the pay TV and streaming business from its studio operations. The goal appears to be creating two stand-alone companies so investors can value the Starz and studio assets separately amid a contracting media and entertainment landscape.
And while some potential suitors appear to see Starz as a streaming platform, others are looking at Lionsgate and its programming library as a possible indie studio acquisition as digital titans like Apple and Amazon muscle into Hollywood.
After the closing of the planned formal separation, pre-transaction shareholders of Lionsgate, the Hollywood studio, will own the shares in the two separately traded public companies. The transactions, involving a complex share exchange structure for shareholders, aim to be “generally tax-free for U.S. federal income tax purposes,” for holders of LGEC and LG Studios common shares.
The prospectus lays out other details of the proposed corporate structure of the separated studio and media networks businesses. Lionsgate plans an annual general and special meeting of its shareholders at its Vancouver headquarters on an unspecified date to obtain approvals for the planned separation agreement, the SEC filing said.
The Lionsgate board of directors recommends approval of the plan of agreement for the formal separation of the studios business and Starz. After the transactions close, Lionsgate said it expects the studios business to be run by CEO Jon Feltheimer, Michael Burns, vice chair, and CFO, Jimmy Barge, among others.
Feltheimer, who has run Lionsgate since 2000, recently renewed his contract at the studio, which extended his deal as CEO in August for five years through July 31, 2029. And Starz post-closing is expected to be run by Jeffrey Hirsch, president and CEO, Starz Networks president Alison Hoffman, and CFO Scott Macdonald, among others.
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