Fledgling Studio STX Secures Investment from Malone's Liberty Global -- Update

By Wayne Ma Features Dow Jones Newswires

STX Entertainment, the young Hollywood studio behind the "Bad Moms" franchise, said Thursday it will receive an investment from John Malone's Liberty Global PLC.

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A person familiar with the matter said Liberty would invest $35 million, valuing the studio at $1.37 billion. Spokespeople for STX and Liberty said the amount of the investment was incorrect; they declined to elaborate.

The investment in STX comes ahead of its planned initial public offering in Hong Kong next year, where the studio is seeking to raise about $500 million at a valuation of $3.5 billion, The Wall Street Journal has reported.

Liberty Global, based in London, is a sprawling international basket of cable operators that has scooped up assets across the world as it looks to position itself as a media and content-distribution giant.

Mr. Malone's companies have made other content investments over the past few years, which include Liberty Media Corp.'s acquisition of Formula One, and an interest in another Hollywood studio, Lions Gate Entertainment Corp. That studio acquired premium cable channel Starz last year. Mr. Malone was the largest voting shareholder in Starz.

Earlier this year, Liberty Global partnered with an affiliate of U.S. private-equity firm TPG to launch a global TV production and distribution studio. TPG is one of STX's largest investors.

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STX said in a news release early Friday, Hong Kong time, that Bruce Mann, chief programming officer at Liberty, would join its board of directors.

Last month, STX released its second "Bad Moms" film. The sequel has grossed more than $90 million world-wide in its first month, on a budget of around $30 million, according to Box Office Mojo. The original film grossed more than $180 million over its three-month run, on a budget of $20 million.

Founded in 2014 by producer Robert Simonds and Bill McGlashan, a top executive at TPG, STX has focused mainly on mid-budget movies and expanded into television, virtual reality, digital video, music and live entertainment.

STX is projected to book an operating loss of about $85 million on revenue of about $285 million this year, a second person familiar with the matter said. The company's operating loss is expected to widen to about $90 million on revenue of about $755 million next year, the second person said. By 2019, STX is expected to roughly break even on revenue of more than $1.8 billion, the second person said.

STX's potential listing in Hong Kong is part of efforts to stay close to its investors and audience. The studio forged early partnerships with Chinese investors, receiving a major investment in 2014 from Hony Capital, a Chinese private-equity firm. TPG now owns at least a third of the studio, while Hony owns at least a quarter of it, the first person said.

Huayi Bros. Media Corp., China's leading film studio, committed several hundred million dollars to help finance STX's movies for three years starting in 2015.

In 2016, Chinese internet giant Tencent Holdings Ltd. and a unit of Hong Kong-based telecom and media company PCCW Ltd. bought stakes in STX for undisclosed sums. The size of those stakes are each less than 5%, the first person added.

Write to Wayne Ma at wayne.ma@wsj.com

(END) Dow Jones Newswires

November 30, 2017 21:23 ET (02:23 GMT)