Starz was the one bright spot in Lionsgate’s generally weak fourth-quarter earnings Thursday, making clear why the premium cable channel has drawn attention from interested buyers such as CBS. While Lionsgate reported a 12% drop in revenue and an operating loss compared to a profit a year earlier, Starz reported an increase in its subscriber count of 1.2 million to 24.7 million. That includes four million streaming subscribers.
As The Information first reported, CBS made an informal offer of around $5 billion for Starz that was rejected. CBS, which is discussing merging with Viacom, is still interested in acquiring the channel, sources have said.
What might be most interesting to CBS is Starz’ international potential. The company announced that Starz’ online service has three million subscribers internationally and plans to launch in 51 countries in the next few months. That kind of international presence, when combined with Viacom’s Paramount Pictures studio and channels, could help make CBS’ All Access streaming service more competitive with the likes of Disney and WarnerMedia, which are planning their own streaming services in the next few months.
One issue: Starz’ carriage agreement with AT&T’s DirecTV is up for renewal this summer, according to people familiar with the situation. CBS may want to wait and see how that negotiation goes and focus on merger discussions with Viacom for now.