Axios Pro: Media Deals

September 08, 2022

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1 big thing: To spin, or not to spin

Illustration of film clapper with question marks
Illustration: Eniola Odetunde/Axios

Lionsgate wants to separate Starz. Disney wants to keep ESPN.

Why it matters: The contrasting approaches highlight how the entertainment industry is struggling with rapid changes in viewer trends as investors itch for faster growth while maintaining strong margins.

Driving the news: Industry executives spoke yesterday at the Bank of America 2022 Media, Communications and Entertainment Conference.

Disney's side: Disney CFO Christine McCarthy was asked about activist investor Dan Loeb, whose hedge fund Third Point is pushing the company to spin off ESPN. Her response: We like the sports network right where it is.

  • "ESPN is a great business, and it is fully integrated into how we think about delivering entertainment and compelling content to consumers," McCarthy said. "We like the hand we have with ESPN and the way we have integrated it into our product offerings."
  • McCarthy noted that live sports is not only "compelling" but has strong advertising support, naming Monday Night Football and the U.S. Open.

Meanwhile: Lionsgate Vice Chairman Michael Burns said yesterday his team is confident that its plan to separate the studio and Starz is "the right thing to do."

  • "We're not going to make a dumb deal on one or both sides of the business, but we're very encouraged with our potential partners, which in some cases are world-renowned, smart money, and also very smart, strategic," he said.
  • "The Starz side, as you separate it, gives us a currency to really focus on what we do and what we do well, and that's either become part of something bigger or actually getting bigger very quickly," said Jeffrey Hirsch, president and CEO of Starz.

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