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Vivendi’s Canal Plus working on bid for stake in US TV channel Starz

Vivendi’s pay-TV business Canal Plus is working on a potential bid for a minority stake in Starz, the US premium channel known for hit shows including “Outlander”, as it seeks to bulk up amid fierce competition among streaming services, according to people familiar with the matter.

The French group controlled by billionaire Vincent Bolloré has made expanding in pay-TV and streaming a priority after selling most of its stake in Universal Music Group, leaving Canal Plus as its main source of profit.

As technology groups and media companies spanning Amazon, Apple, Netflix and Disney search for titles to add to their streaming services, the value of popular television content and movies has soared.

Lions Gate Entertainment, the Hollywood movie studio that owns Starz, said last year that it was looking to sell or spin off the business, with vice-chairman Michael Burns mentioning recent “transaction multiples” as a reason to consider an exit. Amazon paid this year more than $ 8bn for MGMthe studio behind the James Bond franchise, a signal of how much streaming groups are willing to pay for coveted intellectual property.

Starz, which competes with networks like Showtime and HBO, had about 20mn streaming subscribers at the end of 2021. The sale process is still ongoing, said the people, with initial bids due before summer.

In addition to Vivendi’s Canal Plus, Starz has also attracted interest from set-top box maker Roku, which has teamed up on a bid with private equity group Apollo, for a stake of up to 20 per cent. The Wall Street Journal first reported their plans to bid.

Lions Gate is seeking a valuation for Starz along the lines of the $ 4.4bn, including debt, it paid for it in 2016, said the people, although the potential bidders have cast that figure as too high.

The group was boosted by franchises such as The Hunger Games and Twilight films in the 2000s. But the company’s stock has halved in recent years as revenue shrank at its movie studio, which has struggled to produce hits. Analysts have noted that Lions Gate’s stock market valuation is less than the sum of its parts.

Buying a stake in Starz would bring Vivendi a chunk of new subscribers to add to the 24mn it now has at Canal Plus, which would probably improve its profitability by allowing TV and movie production costs to be spread over a larger base. Driven by acquisitions outside its home market of France, Canal Plus has more than doubled its subscribers in the past five years with about 15mn of them in Europe and 7mn in Africa, but it has no presence in the US.

Lions Gate and Vivendi declined to comment.

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