John Malone’s Liberty Global has left the door open for a full acquisition of content provider Lions Gate Entertainment.
John Malone’s Liberty Global (NASDAQ:LBTYA) has left the door open for a full acquisition of content provider Lions Gate Entertainment (NYSE:LGF).
Liberty and Discovery Communications (NASDAQ:DISCA), in which Malone is the largest shareholder, announced on Tuesday that they would each pay US$195m for 3.4% stakes in Lions Gate from funds affiliated with MHR Management, the investment vehicle of the target’s chairman Mark Rachesky. Liberty CEO Mike Fries and Discovery CEO David Zaslav will both join Lions Gate’s board of directors. Malone himself bought a 3.4% stake in Lions Gate in February and is already a board member.
Lions Gate has more than 30 television shows on 20 different networks, including popular series Orange is the New Black and Mad Men. It also has a presence in film production and distribution, home entertainment, digital distribution, new channel platforms and video games.
Asked at Liberty Media’s investors day whether the company would consider acquiring Lions Gate or another movie and TV content creator, Malone was cited by local media saying that “the store is always open”, adding “we don’t rule anything out”.
However, both Malone and Liberty Media CEO Greg Maffei pointed to past mistakes in content, with the latter saying the worst thing the company had done was enter the movie business.
All the same, Malone was cited saying that he thought the company’s biggest mistake may have been “not going hostile on Netlfix” when it saw an opportunity to acquire the popular online streaming service years ago.
The investors day came just days after Liberty Media revealed plans to split into three new tracking stocks: Liberty Sirius Group, Libert Braves Group and Liberty Media Group, which will include its equity interests in Time Warner, Viacom and others.
Macquarie Research analysts said in a note that they think the split makes Liberty “more nimble for media consolidation both as a form of currency and a vehicle to raise liquidity”.
They noted that Malone has openly discussed consolidating the “free radicals” of media and described the Lions Gate deal as “the second step in what is a series of manoeuvres … for Lions Gate to gain a much larger footing in media and opens a world of possibilities as his range of influence spans Discovery, Charter-Time Warner, Liberty Global-ITV-TV3, and Televisa”.
