Lionsgate strikes SPAC deal with Screaming Eagle to split studio business from Starz

Mythic Quest

Lionsgate is splitting its TV & film studio business from Starz in a move that values the production and distribution division at $4.5bn.

Screaming Eagle Acquisition Corp, a special purpose-acquisition company (SPAC) led by financier Eli Baker, will become home to the Selling Sunset, Hunger Games and John Wick division that claims around 18,000 titles.

The deal, revealed late December, will free up around $350m that will be used to pay off debt and support its strategy following the acquisition of Entertainment One from Hasbro.

Jon Feltheimer

It is also likely to place Lionsgate in a more favourable light for potential buyers when it comes to M&A activity.

Lionsgate enjoyed a successful 2023, producing shows such as Mythic Quest for Apple TV+ and John Wick: Chapter Four on the movie side, helping to deliver a revenue rise of 21% last quarter.

The SPAC deal will see Lionsgate holding an 87.3% stake in Lionsgate Studios, while Screaming Eagle – which is chaired by veteran media exec Harry Sloan – and other investors will hold the balance.

Lionsgate CEO Jon Feltheimer said the deal would create “one of the world’s largest publicly-traded pure play content platforms with the ability to deliver significant incremental value to all of our stakeholders.”

Feltheimer added that the move, in addition to the acquisition of eOne and its majority stake in 3 Arts Entertainment struck in November, would deliver “a thriving standalone content company with a strong financial growth trajectory.”

“We are thrilled to be part of establishing Lionsgate Studios as one of the only pure play content companies in the public markets, which is well positioned to unlock value for both existing and new shareholders,” added Screaming Eagle CEO Eli Baker.

Gaslit

The deal is due to close in the spring of 2024 and comes more than two years since Lionsgate first revealed its plans to sell or spin off Starz, which came five years after the studio acquired the company for $4.4bn.

Final plans for the split were delayed until early 2024, following Lionsgate’s planned acquisition of eOne and “uncertainties” surrounding the Hollywood strikes.

Lionsgate has been trimming its operations over recent months, including pulling out of Latin America as it looks to scale back its international operations.

The company made an SEC filing in July in which it detailed how Lionsgate’s film and TV studio would become a separate company to its media networks assets, namely Outlander, Gaslit and Power Book unit Starz.