Lionsgate Shares Plunge To Near Eight-Year Low On Starz Carriage Anxiety

Shares in Lionsgate dropped 5% Friday, closing at $9.03, after a week of investor angst over the distribution future of Starz. The stock has not been as low since late 2011.

One of the culprits was a report in The Information, which suggested that Comcast, the No. 1 U.S. cable operator, was prepared to drop Starz and Starz Encore after their contract expires at the end of the year. Such a move would slash the penetration by the premium network by about one-third and take top draws like Power and Outlander off the linear airwaves.

Sources familiar with relations between the companies tell Deadline it’s premature to say Comcast would exercise the nuclear option. Often when major carriage renewals come up, there is saber-rattling and maneuvering by both sides, so it’s entirely possible this is more of the same.

Nevertheless, the aggressive efforts by programmers to develop direct-to-consumer services are undoubtedly putting strain on the traditional bundle. Starz in particular has been on a growth curve of late, reporting 400,000 new streaming subscribers in the quarter ending in June, bringing it to 4.1 million. During a lengthy and expensive impasse with Altice USA in early 2018, Altice went so far as to recommend that customers avail themselves of the Starz OTT service while the dispute got resolved.

Since that dust-up, Lionsgate has managed to wrap up major distribution deals without disruption. The company re-upped with Dish earlier this year and announced a new carriage pact with AT&T on Friday morning.

The much larger question looming over Lionsgate is about M&A, including whether Starz will stay in the fold for much longer. Talks were held last spring between the company and CBS about a potential acquisition, but they broke down over price and CBS was pulled into its long-awaited merger with Viacom. Lionsgate acquired Starz in 2016 for $4.4 billion in cash and stock.

Reps for Lionsgate and Comcast had no official comment when contacted by Deadline.

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