Struggling Under The Weight of Starz

Lionsgate plans to cut ties with the streaming service it bought in 2016 for $4.4 billion

-  Thomas Buckley

On March  20 the Chinese Theatre along Hollywood’s Walk of Fame lit up for the premiere of John Wick: Chapter 4, the latest installment in the hyper-successful action film series. Keanu Reeves, who stars as assassin John Wick, mixed with fans and fellow cast members before the opening credits rolled to rapturous applause.

The movie, which opened in thousands of theaters around the world on March 24, would go on to make $138 million in its first weekend, offering a reprieve to Lions Gate Entertainment Corp., which has stumbled lately. Despite its library of almost 20,000 titles, including multibillion-dollar franchises such as Twilight and The Hunger Games, Lionsgate has struggled to find a buyer and has lost two-thirds of its market value over the past five years. 

Lionsgate’s troubles stem from its 2016 purchase of the Starz cable channels and streaming service for $4.4 billion. That’s double the market value of the entire company after Lionsgate last year wrote down the Starz acquisition by $1.5 billion. “While Lionsgate and Starz made sense, it’s still far too small” to compete in a consolidating industry, says Rich Greenfield, an analyst at LightShed Partners.