Lionsgate, the entertainment company responsible for popular movies such as the “Hunger Games,” recently purchased the premium channel Starz for $4.4 billion.
As a way of combatting sudden changes in the media industry, Lionsgate and Starz used this marketing strategy to add more content in their entertainment portfolio. This increases the value of the industry and makes them more stable. The two companies had been discussing the collaboration for some time now, and will finally be taking effect.
After Lionsgate’s stock fell due to receiving a significantly low earnings report, the marketing move of joining with Starz helped the comp
any get back on its feet.
Starz shareholders received a $32.73 per share increase and investors wit
h Class B stock received $7.26 cash and 0.621 of a share of Lionsgate voting stock. Lionsgate shares then jumped up 8% while Starz shares jumped up 9%, signaling improvement as the two companies merge together.
Mark H. Rachesky, the chairman of Lionsgate, stated that “this strategic transaction positions us extremely well to unlock the underlying value of our content to create substantial lasting value for our shareholders.”
Overall, two movie companies merging together puts both companies in a better position due to the spontaneous nature of the film industry. Especially with Lionsgate being the source of some of the most successful films, such as “Twilight” and the “Hunger Games”, Starz can greatly benefit from its content. With Starz already having 24 million subscribers on its own and its accompanying brand, Starz Encore, having 32 million subscribers, the collaboration between the two companies is sure to bring about many benefits for both Lionsgate and Starz.
Marketing and business analysts have foreseen the prosperity that can arise from these two companies working together and so far, evidence has shown that stock values and media content have increased. Lionsgate has high hopes for its future and upcoming films.