Starz shares are up about 7% in postmarket trading after Bloomberg reported that the premium network company is in deal talks with AMC Networks. Citing “people familiar with the matter,” the story characterizes the talks as “preliminary” and says the companies have differed over Starz’s valuation.
The companies declined to comment on the substance of the report, but each sought to discredit the story by characterizing it as mere “speculation.”
Starz had a market value of $3.9 billion at the end of trading today. That’s up 30.6% in 2015 — largely because investors consider it a takeover target. It’s controlled by Liberty Media Chairman John Malone who has made it clear that he’d like to find a home for Starz, and in February joined Lionsgate’s board after forging a stock swap deal.
Meanwhile AMC has been growing. Last year it expanded overseas with a surprising $1 billion acquisition of European network owner Chellomedia — which was owned by Malone’s Liberty Global. AMC also represents BBC America after paying $200 million last year to turn it into a joint venture.
But if the Bloomberg report is accurate, then the implications could reach beyond Starz and AMC.
The home of channels including AMC, IFC, Sundance, and WEtv is controlled by Cablevision CEO James Dolan and his family. Cablevision’s systems are concentrated in the tri-state area around New York City, but don’t include a key piece — Manhattan. Dolan has said he believes the market should be consolidated.
That brings us back to Malone. He’s also the biggest shareholder in Charter Communications, which is in the process of buying Time Warner Cable, which has the Manhattan cable franchise.
Last month AMC chief Josh Sapan told Deadline that AMC does not have to grow, although there’s no structural impediment to a deal.
“We’ve operated in an environment on the multichannel video retail side that’s been consolidating space for a decade,” he told us. “During that period of time, and during the last four years since we’ve spun [from Cablevision], our channels have increased in importance at the size that we are. Our wholesale rates have escalated above market most of the time. Social media has also created a more level playing field. What seems to matter by degree more is potency and passion, not size.”