In a new SEC filing, Starz identifies two companies other than Lionsgate making offers for Starz. In separate notes Monday, analysts Todd Juenger of Sanford C. Bernstein and Rich Greenfield of BTIG are pretty sure that “Company A” in the filing is CBS.
CBS CEO Les Moonves was asked about Starz during the CBS’s investor day presentation in March and said that CBS takes a look at every deal, but hasn’t done one in a long time.
According to the filing, Company A’s first offer, worth $30 a share, came on March 18, three days after the CBS investor day. Negotiations continued with counter offers from both of the other suitors.
But by June, Malone had decded to do a deal with Lionsgate, either with or without other Starz shareholders included.
Malone indicated to the Starz board that he was concerned a deal with Company A would risk antitrust problems and that if a transaction was blocked, it would hurt the value of Starz.
Greenfield found concerns about anti-trust surprising. Neither Starz nor CBS’s Showtime unit controlled a great deal of movie studio output. Nor as a combination did they have as many subscribers as Netflix.
Greenfield said CBS’s willingness to do a big deal was also surprising given the uncertainties involving Sumner Redstone, who controls both CBS and Viacom.
“There has been significant disagreements about strategic direction at Viacom between the Board/management and majority shareholder Sumner Redstone over the future of Paramount Pictures. In contrast, there has been no public pushback on CBS’s board or its management from Redstone over a Starz acquisition attempt. Just another sign of how Redstone/Moonves are fully-aligned in contrast to Redstone/Dauman,” Greenfield said.
Greenfield adds that owning Starz would have upped CBS’s presence in the new and promising OTT world. CBS last week disclosed that its CBS All Access and Showtime OTT product have 2 million subscribers between them. Greenfield estimates Starz has another 800,000.