Malone Boosts Stake In Lionsgate (NYSE:LGE), Analysts Ask, “What’s Next”
$LGF
Tuesday, John Malone, the billionaire who owns 29% of Discovery Communications and 25% of Liberty Global said each of thos conglomerates have purchased a 3.4% stake in Lionsgate Entertainment (NYSE:LGE), in addition to the 3% Mr. Malone already held, and analysts weighed in on what the move means.
Some predict an outright acquisition in the future, perhaps a merger with Starz, also a company in which Mr. Malone is heavily invested, others noted the more obvious content and distribution synergies, or perhaps it’s a move toward the creation of another online service.
Mostly, Wall Street appears Bullish the deal, with Lionsgate shares moving 4% higher on 5X the normal volume, the news came just after the company reported lackluster earnings. Discovery was up 4% Tuesday, as well, and Liberty Global was up 1%.
Starz also moved 2% higher on more-than-average volume even though the TV-network company isn’t mentioned in the Lionsgate-Discovery-Liberty announcement.
And, it should not be forgotten that Starz has owned a stake of Lionsgate since February, when Mr. Malone traded shares of Starz for shares of Lionsgate, a move that got him a board seat at Lionsgate.
The deal has Discovery CEO David Zaslav and Liberty Global president and CEO Michael Fries joining the Lionsgate boardroom while Mr. Malone’s influence also grows at Lionsgate.
Analysts were also noting the mogul has interests in the cable pipelines that deliver the content created by Lionsgate, Liberty, Discovery and Starz, including Charter Communications, which is acquiring Time Warner Cable (NYSE:TWC)
For Piper Jaffray analyst James Marsh, Mr. Malone’s latest stock purchases indicate more partners likely to come for Lionsgate. “We see a number of ways the companies can work together. Liberty could push for new OTT offerings, might be interested in library deals, potentially starting new channels,” Mr. Marsh wrote in his note.
| Symbol | Last Trade | Date | Change | Open | High | Low | Volume |
| NYSE:LGF | 39.83 | 10 Nov-2015 | 1.55 | 40.1 | 40.81 | 38.33 | 5,200,500 |
| HeffX-LTN Analysis for LGF: | Overall | Short | Intermediate | Long |
| Bullish (0.31) | Neutral (0.05) | Very Bullish (0.62) | Bullish (0.26) |
Stay tuned…
HeffX-LTN
Paul Ebeling
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