Discovery, Liberty Global take stakes in Lionsgate

Each company will buy a 3.4% stake in Lionsgate, and both Liberty Global's Mike Fries, and Discovery Communications' David Zaslav (pictured) will have seats on the Lionsgate board.
November 10, 2015

Discovery Communications and Liberty Global have agreed upon a deal, “in principle and subject to documentation,” that will see the companies each take a 3.4% stake in Lionsgate.

Under the deal, each company will pay approximately US$195 million to purchase 5.0 million shares in Lionsgate from MHR Fund Management, the investment firm owned by Mark Rachesky, Lionsgate’s chairman and largest shareholder. In addition, Liberty Global’s president and CEO Mike Fries and Discovery Communications’ president and CEO David Zaslav will each have a seat on Lionsgate’s board of directors.

Each party will enter into separate commercial agreements with Lionsgate, “for a preferred partner relationship with respect to licensing rights for certain theatrical and television content across their markets,” according to a release announcing the deal.

Lionsgate founder Frank Giustra, who served for 11 years on the board, will step down.

The share acquisitions are expected to close later today (November 10). Santa Monica-headquartered Lionsgate, the company behind the Hunger Games film franchise and such television properties as Orange is the New Black and Mad Men.

“One of Discovery’s advantages is our ownership in a diverse portfolio of global content and IP, which uniquely positions the company to deliver an audience across multiple media ecosystems,” said Zaslav in the statement. “Lionsgate has created a strong television business and we are proud to take this ownership stake to gain access to terrific storytellers, creative leadership, and global formats and IP, in both nonfiction and scripted programming. As with all of our creative partners, we look forward to telling world-class stories with Jon and the deep management team at Lionsgate, and further strengthening Discovery’s content pipeline across our linear and digital platforms around the world.”

“The company is a unique success story in the entertainment industry,” offered Fries. “Lionsgate is led by an incredible management team and they’ve created one of the deepest portfolio of brands and franchises in the industry. This strategic content investment will also create opportunities for Lionsgate to become an even more important supplier of high-end premium content to our 24 million video and 18 million broadband subscribers.”

“This transaction aligns Lionsgate with two of the most visionary players in the global marketplace, and we’re delighted to add David and Mike’s experience and expertise to our Board of Directors,” said Lionsgate CEO Jon Feltheimer and vice chairman Michael Burns in a joint statement. “We believe that this agreement creates tremendous strategic opportunities to grow our content initiatives around the world and positions us to generate significant incremental value for our shareholders.”

Liberty Global’s John Malone joined Lionsgate’s board earlier this year, and already has a 3.5% share in the company, following a stock exchange between Lionsgate and the Starz cable network, of which Malone is the largest voting shareholder. Malone also has a 29% voting stake in Discovery Communications.

About The Author