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The two companies have held high-level talks for several
months and have also considered a variety of partnerships, a
source told the newspaper. (http://lat.ms/1jKXtYA)
Lions Gate's management would run the combined company and has
expressed interest in finding an important role for Starz Chief
Executive Chris Albrecht, the Times reported, citing a company
executive.
The valuation of the two companies is one of the factors
complicating the deal, the Los Angeles Times reported.
Lions Gate has a market capitalization of $5.81 billion while
Starz is valued at $3.97 billion.
Lions Gate was interested in pursuing a merger with Starz last
year, but the two sides could not come to terms over valuation,
the Wall Street Journal had reported in June.
The companies were not immediately available for comment.
Last month, Bloomberg reported that cable network operator AMC
Networks Inc was in preliminary talks to buy Starz.
Starz's rival movie channel Epix, which Lions Gate co-owns with
Viacom Inc and MGM, also remains a bone of contention in the
deal's closing, according to the Los Angeles Times report.
Lions Gate reported a stake of 2.31 percent in series A common
stock of Starz as of March 27, while John Malone reported a 2.4
percent stake as of Feb. 10. Malone has a roughly 3 percent
stake in Lions Gate.
Lions Gate shares were up 7.9 percent, while Starz shares rose
10.1 percent in extended trading.
(Reporting By Arathy S Nair in Bengaluru; Editing by Don
Sebastian, Bernard Orr)
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