Two John Malone-controlled companies, Liberty Global and Discovery Communications, are taking a 3.4% stake in Lionsgate, equivalent to 5 million common shares each.
In exchange for the shares, Liberty and Discovery each will pay approximately $195 million. Both companies also will have an executive seat on Lionsgate’s board of directors, held by Liberty Global President and CEO Mike Fries and Discovery CEO David Zaslav. Malone himself already has a seat on the Lionsgate board, and owns 3.5% of the company.
The transaction is being handled by MHR Fund Management, which is controlled by Lionsgate Chairman Mark Rachesky. Rachesky will maintain a 28% stake in the studio. Malone already has a seat on Lionsgate’s board. A designee from MHR, Emily Fine, also is joining Lionsgate’s board, while Lionsgate founder Frank Giustra, who has served a total of 11 years on the board, will step down.
As part of the deal, both Liberty and Discovery are entering into “separate commercial agreements with Lionsgate providing for a preferred partner relationship with respect to licensing rights for certain theatrical and television content across their markets.”
“We’re very enthusiastic about this alliance with Lionsgate, and I’m pleased to join Chairman Mark Rachesky and the rest of the Lionsgate Board,” said Fries in a statement. “The company is a unique success story in the entertainment industry. Lionsgate is led by an incredible management team and they’ve created one of the deepest portfolio of brands and franchises in the industry. This strategic content investment will also create opportunities for Lionsgate to become an even more important supplier of high-end premium content to our 24 million video and 18 million broadband subscribers.”
“One of Discovery’s advantages is our ownership in a diverse portfolio of global content and IP, which uniquely positions the company to deliver an audience across multiple media ecosystems,” said Zaslav, also in a statement. “Lionsgate has created a strong television business and we are proud to take this ownership stake to gain access to terrific storytellers, creative leadership, and global formats and IP, in both nonfiction and scripted programming. As with all of our creative partners, we look forward to telling world-class stories with Jon and the deep management team at Lionsgate, and further strengthening Discovery’s content pipeline across our linear and digital platforms around the world.”
Brief Take: It’s hard to forecast Malone’s next move, but some sort of major merger seems to be in the cards for Lionsgate.
Read more: THR