Lions Gate and Starz Rekindle Merger Talks

Liberty Media Corp. chairman Malone arrives at the annual Allen and Co. conference at the Sun Valley
Liberty Media Corp. chairman John Malone arrives at the annual Allen and Co. conference at the Sun Valley, Idaho Resort July 12, 2013. REUTERS/Rick Wilking (UNITED STATES - Tags: BUSINESS MEDIA) - RTX11L6R
Photograph by Rick Wilking — Reuters

Lions Gate Entertainment confirmed that it has rekindled merger talks with premium cable network Starz roughly a year after billionaire media mogul John Malone set the stage for a potential tie-up.

Lions Gate (LGF) said in a filing with the U.S. Securities and Exchange Commission that it “intends to explore whether there is a potential mutually beneficial combination” between itself and Starz. Lions Gate is Hollywood’s largest independent film studio, with the blockbuster Hunger Games film series under its belt along with popular television programs such as AMC’s Mad Men and Netflix’s Orange is the New Black.

Talk of deal between Lions Gate and the Englewood, Colo.-based Starz (STRZA) surfaced last February, after Liberty Media Chairman and Starz shareholder John Malone exchanged part of his Starz holdings for a 3.4% stake in Lions Gate as well as a seat on the latter’s board of directors. The two companies previously discussed a merger, but could not come to terms on valuation. Malone also reportedly wanted to wait until three years had passed from Starz going public in January 2013 (which followed a spinoff from Liberty Media) to avoid tax issues with the Internal Revenue Service, according to Bloomberg. In the meantime, there were also rumored deal talks between Starz and AMC Networks (AMCX) last fall.

Malone has spent decades amassing a media empire that includes a growing collection of cable holdings in Europe and the billionaire was also a key factor in pushing for the $55 billion merger of Charter Communications (CHTR) and Time Warner Cable (TWC), which still awaits regulatory approval. Malone also told the Wall Street Journal last summer that, in addition to Starz, Lions Gate could look to “other free radicals in the industry” as potential takeover targets.

While Lions Gate has a headquarters in California, the company was formed in Vancouver and Malone is reportedly keen on the benefits of merging the two companies to take advantage of lower Canadian tax rates.

Fortune has reached out to Starz for comment and will update this article if the company responds.

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