Lionsgate in talks to sell Epix stake to MGM, Viacom -sources

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By Liana B. Baker and Jessica Toonkel

<span class="articleLocation”>Lionsgate has initiated talks to sell
its stake in Epix to the premium U.S. cable channel’s other two
shareholders, MGM Holdings Inc and Paramount, a unit of Viacom
Inc, according to people familiar with the matter.

The move follows Lionsgate’s announcement that it would
explore its options for its Epix stake following its $4.4
billion acquisition last month of pay TV network Starz
Entertainment LLC.

Any deal would likely value Epix, which comes with an online
streaming service, somewhere between $1 billion and $2 billion,
the people said this week. The outcome could be that MGM and
Viacom become 50-50 partners in Epix, the people added,
cautioning that no deal was certain.

The sources asked not to be identified because the
negotiations are confidential. MGM declined to comment. Viacom
could not be reached for comment. Spokesmen for both Lionsgate
and Epix declined to comment.

Currently Viacom and its studio unit, Paramount Pictures,
own about 50 percent of Epix, while Lionsgate owns less than 32
percent, and MGM has about 19 percent, according to filings.

Epix, whose shows include “Berlin Station” and “Graves,” has
about 14 million subscribers, according to SNL Kagan. It is
available in over 50 million homes. Starz owns a pair of premium
cable channels and a streaming service.

Months after Bob Bakish, who previously ran Viacom’s
international division, became chief executive officer, the
company is looking to become a 50-50 partner in Epix.

Bakish succeeded Philippe Dauman, who tried to sell Viacom’s
stake in Paramount, setting off a courtroom battle with Viacom’s
controlling shareholders Sumner and Shari Redstone. Dauman
resigned last August.

Following that battle, the Redstones pushed for Viacom to
merge with CBS Corp, which they also control, but
abandoned those efforts late last year.

MGM, which owns a film library, has been exploring its
options for some time following its emergence from bankruptcy
six years ago. It is controlled by hedge funds including
Anchorage Capital Partners and Highland Capital Partners.

Lionsgate CEO Jon Feltheimer, asked at an investor day this
month if Epix was for sale, said the business is “a valuable
asset” and was “throwing off cash,” but added that Lionsgate,
Viacom and MGM would “realize the value whichever way we all
decide is best for our companies.”



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