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Lionsgate Entertainment (LGF.A) – Get Lions Gate Entertainment Corp Class A Report shares surged Friday after the film and television company said in regulatory filing that it was exploring a possible spin-off its Starz pay-TV channel and swung to second-quarter profit.
Shares of the Santa Monica, CA company were up 11% to $15.39 at last check.
In a filing with the Securities and Exchange Commission, the company said its board had authorized management “…to explore potential capital markets alternatives for its Media Networks business (STARZ) including, but not limited to, a full or partial spin-off, split-off, issuance of a tracking stock or other transactions.”
Starz programming consists of theatrically released motion pictures and first-run original television series, including the ‘Power’ franchise, ‘Blindspotting’ and ‘Hightown.’
“While we continue to realize substantial synergies from bringing Lionsgate and Starz together, we also see the opportunity to potentially unlock significant shareholder value under a scenario where investors have the ability to value our studio assets and Starz separately,” Lionsgate vice chairman Michael Burns said on the company’s earnings call, according to the Hollywood Reporter.
Burns said that “recent transaction multiples in the media space give us confidence that exploring alternate paths is prudent.”
“Additionally, we believe that a number of the structures we’re considering would allow Lionsgate and Starz to preserve many of the operational benefits we’re currently achieving within a single corporate structure,” he added.
Lionsgate CEO Jon Feltheimer said in a quarterly news release that “Starz drove growth of 1.3 million global streaming subscribers with the strong premieres of three new series in the quarter.”
Separately, Lionsgate reported net income of $7.5 million up from a year-ago loss of $18.5 million. Earnings per share came in at 15 cents, matching FactSet consensus estimates.
Revenue totaled $887.8 million, up nearly 20% from a year ago, though below FactSet estimates of $920.3 million.
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