Lionsgate Studios May Make Lower-Budget Movies Just For Starz As Company Moves Ahead With Split

Lionsgate Studios May Make Lower-Budget Movies Just For Starz As Company Moves Ahead With Split

Lionsgate is thinking about making “lower-budget” movies for Starz as the TV streaming and linear network is set to split with Lionsgate Studios by the end of the year.

“I wouldn’t be surprised if we also made some lower budget movies specifically for Starz,” said CEO Jon Feltheimer on a post-earnings call. “And we’re talking about that and thinking about the calculus for how that works.”

Talking about Lionsgate theatrical output – from big swings to the many smaller films on its slate that he said generate 90% returns, Feltheimer noted that “at the end of the day, we take all that product, all that product, and all that huge investment, and it goes all into the library. And the new stuff drives the old stuff” in a virtuous circle.

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“We’ve got a really a great ecosystem, whether we’re the same company or whether we’re two companies. I think you can expect those mutual benefits to continue.”

Lionsgate Studios recently became a publicly traded company (stock symbol LION) through a SPAC merger in the first step in a separation. Lionsgate Entertainment (LGF), which still includes the studio and Starz, is trading as usual. But the plan is to spin out the studio to shareholders (except the circa 13% owned by SPAC investors), leaving two pure play companies. Vice chair Michael Burns said the LGF board has authorized a special committee to work out the terms of the spin, which intends to collapse the Class A and Class B shares, with some premium for the A stockholders. There will be a shareholder vote on it all before moving forward.

“We are going through the processes, you know, regulatory, shareholder votes, notices, all of that. So I think we all believe that the sooner the better. But we’re putting that target by the end of the year and have to follow all these different processes. Also remember, there’s a Canadian aspect to us. And all those i’s and all those t’s have to be crossed,” he said.