Roku has partnered with private equity company Apollo Global Management to make a joint bid for a piece of premium cable brand Starz.
As first reported Tuesday by The Wall Street Journal, and confirmed by the Penske Media Company Showbiz Trade Monopoly, Roku and Apollo are looking to secure as much as a 20% stake in Starz, which was acquired by Lionsgate in 2016 for $4.4 billion.
The first round of bids reportedly occurred several weeks ago, and DirecTV was said to also be interested in Starz.
Neither Roku, Apollo or Lionsgate has publicly commented on any of this. But Lionsgate now has a market capitalization of only around $3 billion and is said to be looking for ways to unlock the asset value in its Starz, via spinoff or other mechanism.
Perhaps not unnoticed by Lionsgate CEO Jon Feltheimer and his management team: Amazon recently closed on an $8.45 billion deal for MGM, certainly a premium price for the century-old Hollywood studio.
Meanwhile, AT&T’s strategy of spinning off DirecTV and WarnerMedia, getting those assets off the books while still enjoying majority stakes in them, might also loom large for Lionsgate.
As for Roku, it has watched its market capitalization dwindle to just more than $14 billion, nearly a fifth of where it stood last summer, with investors suddenly unsure of its ability to outcompete Amazon and Google long-term for the position of “gatekeeper” to the global connected living room.
Lately, Roku has also had trouble convincing Wall Street it can be also be a future force in advanced advertising — an expensive quest that will require plenty of original content.
Owning a piece of a content company, however, might help that cause.
Roku said its AVOD play, Roku Channel, now reaches 80 million homes. Roku recently signed an agreement with Lionsgate to program Roku Channel with Lionsgate films when they finish their pay 1 window run on Starz. Roku also worked with Lionsgate to re-establish canceled NBC series Zoey's Extraordinary Playlist on Roku Channel.
For its part, Apollo Global recently purchased Verizon's media assets, as well as a piece of film studio Legendary Entertainment.
Premium cable brand Starz produces such hit original series as Outlander and Power. Starz finished 2021 with 19.7 million subscribers to its direct-to-consumer streaming service, Starz Play. ■
