Yahoo News Starz CEO Jeff Hirsch “Excited” For Lionsgate Split: “It’s Hard For Investors To Get Their Head Around A Combination Company”
Starz CEO Jeff Hirsch said the long-in-the-works separation of the premium linear and streaming programmer from Lionsgate’s studio unit will be a boost to both entities.
“I don’t think the Starz story is as clear as it could be because we’re part of a bigger company,” he said during an appearance at the BofA Securities Media, Communications & Entertainment Conference. Joking that “in Hollywood, movies are much more exciting than television,” he said sometimes Starz flies a bit under the radar.
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After it recently refocused on English-speaking markets and refined its focus, Hirsch said Starz is now aiming to be an “add-on service” with 20 million to 25 million subscribers and financials that run counter to the current angst about streaming and pay-TV. The company is 65% digital, Hirsch said. “We pivoted away from linear while being profitable is a really great story. We have not as much dependence on the linear business that you’re seeing in all these fights that are going on in the marketplace today. It sets us up to be a strategic platform for some of the assets that may fall out of some of our peer groups” as they look to license more content or otherwise pull back on spending.
Lionsgate execs announced last month that the separation will occur in early 2024 as opposed to this fall due to the acquisition of eOne and other factors. Over a roughly two-year period, Lionsgate looked at a number of strategic options, finally landing on the split, which needs final shareholder approval.
“I’m excited about the separation,” Hirsch continued. “It will allow both businesses to tell their stand-alone story in their own way. I think investors — and we saw this when we spun out Time Warner Cable in 2009 — investors like simple stories, whether it’s pure studio selling as an arms dealer, or a pure network business. It’s hard for investors to get their head around a combination company.”
As Starz drives toward its goal of attaining a 20% profit margins by 2025, Hirsch said the company is reining in spending on content, but he argued creative problem-solving means subscribers hopefully won’t notice a major difference. “It’s not less content — it’s less-expensive content,” he said. “There are a lot of ways to do that. You can go from scripted to unscripted. You can do, instead of 58-minute shows, you can do 52-minute shows. You can do newer shows vs. older-season shows. In the arc of shows, when you go from Season 3 to Season 4, most of the talent gets big raises, so there’s a big cost spike there.”
Because of how long in advance the company produces programming, the ongoing strikes are not likely to have a negative impact on Starz until the first part of 2024. Hirsch said he is hoping for a quick resolution to the labor impasse, observing, “The business is more fun when everybody’s working.”
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