Embattled entertainment firm Lionsgate is considering spinning off its premium cable channel Starz as a separate company as it looks at potential turnaround efforts amid a lengthy stock slide, according to multiple reports.
The spinoff would allow shareholders to invest separately in Lionsgate’s studio division and in Starz. It is one of several options under consideration by Lionsgate executives, including a potential sale, according to multiple reports.
Lionsgate has made heavy investments in recent years to grow Starz, which has added global subscribers at a rapid clip but contributed to the company’s heavy debt load. The platform had more than 26 million subscribers as of the most recent fiscal quarter, but company forecasts say it is likely years away from profitability.
Establishing Starz and its sister network Encore as a separate entity would shift much of Lionsgate’s $2.9 billion debt load to that company. Some Lionsgate executives argue that transfer would make the core studio division a more attractive acquisition target, according to the Wall Street Journal, which first reported the talks.
Lionsgate’s movie and television business is best known for producing hit series such as the “Hunger Games” franchise. Starz’s offerings include “Outlander” and “Power.”
Lionsgate shares fell nearly 4 percent in trading Tuesday but pared losses after-hours. The company’s stock is down more than 40 percent so far this year.
The company has been under pressure amid stiff competition in the media industry and the rise of new streaming rivals.
Earlier this month, billionaire media investor John Malone sold off his remaining stake in Lionsgate in a series of transactions. Malone and his affiliated holdings sold more than 2 million shares to current Lionsgate chairman Mark Rachesky.