Greg Maffei, chief executive officer of Liberty Media Corp (NASDAQ:LMCA) indicated that the company is looking for possible partnerships for Starz (NASDAQ:LSTZA) with bigger entertainment companies.
Maffei said, “We’ll see if there’s a partnership out there for Starz that makes sense”, he made this comment during the Deutsche Bank Media, Internet and Telecom conference.
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Shares of Starz (NASDAQ:LSTZA) surged by almost 3 percent to $19.47 per share after Maffei made the statement and told investors that the premium movie channel provider is entering a period of programming consolidation.
During the conference, Maffei emphasized that Starz (NASDAQ:LSTZA) has demonstrated an outstanding financial performance over the past five years. He said, “If you look over the last five, six, seven years, Starz has had a heck of a run in terms of free cash flow. So it has not been challenged in that sense.
“On the other hand, are there synergies out there…somebody who had more channels, cross-marketing, ability to bundle better, ability to perhaps have retransmission…and perhaps some cost synergies, you can imagine that scenario. I do believe we are in an era where cable networks will consolidate,” added Maffei.
Liberty Media Corp (NASDAQ:LMCA) spun off Starz Entertainment (NASDAQ:LSTZA) in January this year. The company operates different TV channels including Encore movie channels. Starz channel has 21 million subscribers and its Encore has 34 million subscribers.
Starz (NASDAQ:LSTZA) recently renewed its films rights agreement with Sony Pictures, which helps the company improve its original series offerings to its subscribers. Maffei explained that value of original series boosts Starz ability to increase its rate. Some of the distributors of the company pressed for lowers rates when it distributed its content on Netflix, Inc. (NASDAQ:NFLX).
Its agreement with the online video streaming company already expired. Maffei said, “I’m optimistic about our ability to move pricing going forward. Traditional distributors won’t be happy, but they’ll be understanding that they’ll be playing on a level playing field.”
During the conference, Maffei also said Sirius XM Radio Inc (NASDAQ:SIRI) continues to perform under its new CEO Jim Meyer. According to him, Meyer “has picked up the baton very well and is running with it.”
Last month, Liberty Media (NASDAQ:LMCA) received the approval of the Federal Communications Commission (FCC) to control Sirius XM Radio Inc (NASDAQ:SIRI). The agency believed that the takeover was beneficial for consumers and will not hurt existing competition in the industry.