Lions Gate Entertainment rose to its highest price in more than three months after the company reached a long-term agreement to keep its Starz pay-TV service airing on Comcast’s cable systems.
Comcast had threatened to stop carrying Lions Gate’s Starz and Encore networks on its main bundle of channels. The deal provides for an “orderly transition to an a la carte business” for Starz, according to a statement Monday, but also creates new programming opportunities for both companies.
The accord removes a major worry for investors in Lions Gate, which bought Starz in 2016 in a deal valued at $4.4 billion. With consumers now favoring streaming services, cable operators like Comcast have grown eager to control costs by getting more selective in the networks they carry.
Shares of Lions Gate rose to their highest since September, climbing as much as 9.1% intraday in New York. They were down 38% this year before Monday’s rally. Comcast was little changed.
The agreement—coming days before the current contract’s expiration—allows Comcast’s NBCUniversal unit and its forthcoming streaming service Peacock to license programming from Lions Gate. Starz will also obtain content from NBCUniversal for domestic use and for play on its international streaming service. Financial terms weren’t disclosed.
“This clears significant uncertainty and as such is a significant positive,” Cowen & Co.’s Doug Creutz said in a morning note. He had advised Lions Gate holders in November to “be more aggressive” in adding to their positions as the industry was too pessimistic on the chances of a renewal.
The dispute attracted the attention of Hollywood notables. Curtis “50 Cent” Jackson, an executive producer of the Starz series Power, publicly lambasted Comcast Chief Executive Officer Brian Roberts over reports that the cable giant was considering dropping the network.
Jackson took credit for the new agreement and praised Comcast. “We all make mistakes,” he wrote on Instagram.
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