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Starz Wars

Jon Feltheimer
Lionsgate did not end up keeping its existing capital structure in place: On the contrary, it pulled off one of the most startling eviscerations of bondholder rights that I have ever heard about. Photo: Tom Cooper/Getty Images for SeriesFest
William D. Cohan
May 22, 2024

For more than two years now, Lionsgate Entertainment has been talking about spinning off Starz—its challenged streaming service, which it bought in 2016 for $4.4 billion from John Malone’s media empire—into its own separate company. Nothing much happened with the plan until last December, when Lionsgate announced that it was joining forces with Screaming Eagle Acquisition Corp—a SPAC founded by serial SPAC sponsors Harry Sloan, a longtime Hollywood entrepreneur and the former C.E.O. of MGM, and Jeff Sagansky, a former chairman of CBS Entertainment and a former co-president of Sony Pictures Entertainment.

SPACs have a two-year window to find a deal or they pretty much go poof, forcing the sponsors to return the money they raised to investors. Screaming Eagle was on its last legs, having completed its I.P.O. in December 2021. But right before the two-year deadline, the publicly traded Lionsgate announced that it was merging its studio business, television production business, and 20,000-plus title library with Screaming Eagle. The transaction created a new public company, Lionsgate Studio Corp., valued at $4.6 billion, with Screaming Eagle shareholders owning 12.7 percent, and Lionsgate—the publicly traded entity that still owned Starz—controlling the remaining 87.3 percent. In return for its stake, Screaming Eagle would inject at least $350 million in cash into the new company.