Analyst Todd Juenger explained that with declining audiences, TV networks are looking for more original content than ever before. Studios have been receiving the highest number of orders ever with “very few limits to production capacity.”
Both TV networks and studios cater to theatrical and TV content in their global end markets, which appear to be amid a sustained growth cycle.
Well-Positioned Lions Gate
According to the Bernstein report, “Lions Gate is specifically well-positioned to participate in the growth, with virtues including: a) a unique de-risked film model, and b) a fast-growing independent TV production business which can serve customers including TV networks and SVODs without conflict.”
The John Malone Effect
Juenger also mentioned that John Malone-related entities have recently made strategic investments, which increase the option value for Lions Gate shareholder via future M&A or consolidation.
While expressing optimism for longer-term investors with tolerance for short-term volatility, Juenger stated that shorter-term investors have “frequent trading opportunities in both directions” in the stock.
“Lions Gate and Mr. Malone's likely participation in some form of rollup/consolidation is important across the entire spectrum of media stocks,” Juenger added, while expecting the company to report its FY17 earnings well ahead of the consensus.
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