![]() ![]() ![]() One of the big-picture questions looming over Starz and its pay TV kin is the aggressive effort made this year by Netflix to position itself as an alternative to cable service by vastly expanding its roster of movies and TV shows that it offers via Web streaming. ![]() #RADIOCASTER FULL MEGA SERIES#Starz is on track to boost operating profit this year by 6% as it slowly ramps up original series to differentiate it from the competish. And with zero debt and $1 billion in cash on its books, Starz is in a good position to chart its future. Maffei also acknowledged that Starz would need to be spruced up before Liberty would consider a sale or a spinoff. The goal right now is to spin off Starz, along with Liberty Capital, as a free-standing stock some time next year, he says. But that’s not in the near-term plan, according to Maffei. Liberty’s spate of dealmaking stirred some speculation that it was getting ready to make a move with Starz. “There are still a lot of questions about the long-term future of a premium channel.” Of Liberty’s businesses, Starz is the “most in-transition,” Maffei says. in operations research loves to craft intricate deals that sidestep tax liabilities. As industry veterans know, the Englewood, Colo.-based engineer with a Ph.D. Maffei says Operation Turbo is still very much in the discussion stage, and he suggests its model would be unique in the entertainment biz - which sounds right up Malone’s alley. Maffei says the entity would book revenues, but he wouldn’t characterize it as a unit of Starz. With Operation Turbo, Liberty is believed to be looking to create an entity not directly attached to Starz that would have global partners (ranging, possibly, from media companies to hedge funds and banks) that would get an equity stake and help sell the rights to Starz programming outside the U.S. This is important at a moment when there’s no shortage of outlets vying to deliver contempo films to consumers. #RADIOCASTER FULL MEGA MOVIE#Now Liberty CEO Greg Maffei is in the midst of lining up off-balance sheet financing (a project code-named “Operation Turbo”) to give Albrecht ample resources to develop the original programming that will be crucial to developing Starz into something more than a movie distribution service. Malone signaled his intent to make Starz a pay TV player alongside HBO and Showtime by recruiting former HBO topper Chris Albrecht to take the helm last January. The Starz firmament comprises 16 Starz- or Encore-branded channels. One thing is clear amid all the moving and shaking: Liberty has become focused in recent months on beefing up its Starz-Encore pay cable business. “It won’t necessarily make Liberty any less complex, but (Malone) is trying to narrow the discount some those businesses receive as being pieces in a large holding company.” Part of that effort comes in unlocking assets from the holding company through spinoffs. “What they are trying to do is drive the value of some of their assets,” says Chris Marangi, an associate portfolio manager with Mario Gabelli’s GAMCO Investors. But Liberty’s spate of transactions is also driven by a desire to help make its financials and its three tracking stocks a little more comprehensible to investors and Wall Streeters. Malone, who earned the nickname of the “Star Wars” villain during his years as the iron-fisted gatekeeper of cable titan Tele-Communications Inc., likes to keep his competitors guessing. ![]()
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