Market Overview

Affiliation Agreements With DirecTV, AT&T Mean Reductions In Revenue For Starz

Share:

Starz (NASDAQ: STRZA) has agreed to multi-year extensions of its affiliation with both DIRECTV (NASDAQ: DTV) and AT&T Inc. (NYSE: T). In case Starz had been operating under the new agreement in the first half of 2016, revenue would be less than the reported numbers, FBN Securities’ Robert G. Routh said in a report.

Analyst Routh has no rating on Starz due to its pending merger with Lions Gate Entertainment Corp. (USA) (NYSE: LGF).


Revenue May Be Less Than Reported

The SEC filing for the agreement renewal indicated that in case Starz had been operating under the new agreement for all of 2015, revenue from Starz Networks would have been an estimated $1,287.5 million, while Starz consolidated revenue would have been $1,654.2 million. Both figures represent a reduction of $45.88 million from the reported 2015 numbers, Routh noted.

Moreover, in case Starz had been operating under the new agreement for the first half of 2016, revenue from Starz Networks would have been $662.7 million, while Starz consolidated revenue would have been $814.2 million. Both these figures represent a reduction of $20.3 million from the reported numbers.

“Starz expects other revenue sources to offset the financial impact of the aforementioned extensions and the impact on Starz earnings under these extensions is expected to decrease annually after the first year of the renewal period,” the analyst wrote.

Payments From Lions Gate

In relation to these extensions, Lions Gate has agreed in principle to issue three annual instalments of $16.67 million each to AT&T. This may be in equity or cash, as per Lions Gate’s preference. These payments are subject to the completion of the merger with Starz.

“If the LGF / STRZ merger is not completed the aforementioned payments will terminate and DirecTV and AT&T will have the option to terminate and renegotiate the multi-year extension arrangements with Starz,” Routh noted.

Do you have ideas for articles/interviews you'd like to see more of on Benzinga? Please email feedback@benzinga.com with your best article ideas. One person will be randomly selected to win a $20 Amazon gift card!

Posted-In: FBN Securities Robert G. RouthAnalyst Color

 

Related Articles (DTV + LGF)

View Comments and Join the Discussion!

Latest Ratings

StockFirmActionPT
ESSMaintains328.0
BKNGMaintains2,080.0
BLKMaintains540.0
AVBMaintains228.0
GOLDDowngrades18.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Trading Daily
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com

Tesla Factory Check: Q3 Deliveries Likely To Meet Guidance

5 Stocks Which Plummeted Three Days On Increasing Volume