Starz chief executive Albrecht cites ‘a lot of complexities’ when attempting mergers

Starz Chief Executive Chris Albrecht isn’t ready to announce any major deals to combine his company with movie studio Lionsgate -- or even AMC Networks.

But the veteran TV executive didn’t exactly dismiss reports that merger conversations have been taking place, particularly a tie-up with Lionsgate, the Santa Monica movie and TV studio behind the “Hunger Games” franchise.

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“There honestly isn’t anything to report,” Albrecht said Thursday at a thought leaders’ conference at the Paley Center for Media in New York.

“But it would be weird if I wasn’t talking to these guys,” he said. “Lionsgate is now a shareholder of Starz, and they are certainly interested in what our strategy is.”

This week, the Los Angeles Times reported that Lionsgate and Starz have been engaged in merger talks for several months. If such a union were to occur, it would unite two small independents -- forming the foundation of a new major media company.

“It would be foolish if we weren’t discussing whether there were things we might do together that would benefit both companies,” Albrecht said.

Complicating merger talks are the valuations of both Lionsgate and Starz. Lionsgate, which would be the acquiring company, has a market value of about $6 billion. Starz, with a valuation of nearly $4 billion, is too big for Lionsgate to easily swallow without choking on debt.

“Putting those things together takes an interest, takes a good strategy, and from that you get a conviction -- and then you have to try make a deal,” Albrecht said. “A lot of these companies have controlling shareholders. You can’t end up with a combined company that has more than one controlling shareholder.”

“There are a lot of complexities to this stuff,” Albrecht said, adding that the companies still were shifting through the process to determine whether a tie-up would make financial sense. “So nothing to report.”

Wall Street has long been interested in Lionsgate, which has carved out a lucrative niche as an independent movie studio with an expanding TV business. Then, in February, billionaire John Malone introduced a new layer of intrigue by taking a small stake in Lionsgate and joining its board.

Malone also is a major shareholder in Starz.

In June, the Colorado billionaire suggested a union of Starz and Lionsgate. He noted there would likely will be a roll-up of “free radicals,” small independent entities such as Lionsgate and Starz, as the television and entertainment industry enters a new period of consolidation.

“John Malone has made a career out of creating value out of combinations that other people may not have seen as obviously as he did,” Albrecht said at the Paley Center conference. “Diversification is never a bad thing, if what you are putting together is complementary.”

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