As media giants grapple with rising interest rates, regulatory pressure, and tariff uncertainty, consolidation is on pause — at least for now.
Starz sees opportunity in the chaos. The newly independent premium cable and streaming network is positioning itself to potentially acquire distressed assets and provide tech support to traditional players caught flat-footed by the streaming revolution.
“There’ll be a great shedding first, and then there’ll be a reconnecting of other things,” Starz CEO Jeff Hirsch told Yahoo Finance on Monday. He pointed to a period of strategic soul-searching across the industry. “A lot of folks are inward-looking and trying to figure out who they are and what they do well.”
“Once they figure that out, then I think they’ll shed assets,” the head of the Colorado-based company added.
It’s been a turbulent time for legacy media, which has heavily invested in expensive streaming endeavors amid the mass exodus of pay TV consumers.
Prior to the cord-cutting phenomenon, linear advertising and cable affiliate fees had consistently boosted revenues. But as ad buyers now flee traditional TV channels in favor of digital options like streaming, companies are beginning to realize they may never realize those economics again. These pressures have resulted in waves of layoffs across the industry as companies double down on streaming through newly launched ad-supported tiers, bundled offerings, and price hikes.
That has triggered a broader recalibration of portfolio strategy and, according to Hirsch, is setting the stage for a sweeping wave of divestitures across the industry.
For example, later this year, Comcast (CMCSA) plans to spin off most of its cable properties into a new company, dubbed Versant, while Warner Bros. Discovery (WBD) recently underwent a corporate restructuring to separate its legacy networks, including CNN, TBS, TNT, HGTV, and the Food Network, from growth drivers like studios and its streaming platform Max.
Outside of Comcast and Warner Bros., Disney (DIS) has also explored cleaving off its traditional TV assets, which include broadcast network ABC and cable channels like FX, Freeform, and National Geographic. Disney CEO Bob Iger has since walked back those comments, but it’s still possible a spin-off or asset sale could be revisited, according to analysts.
And with Paramount’s (PARA) deal with Skydance Media set to close in the second half of 2025, it remains unclear what will happen to Paramount’s cable and TV properties after the merger.
“I don’t think anything will happen for the next 12 to 18 months,” Hirsch said. “But I think after that you’ll start to see people reconfigure their businesses.”
Hirsch, whose company Starz (STRZ) began trading on the Nasdaq last month after spinning off from Lionsgate Studios, has signaled interest in acquiring struggling linear assets that align with Starz’s core audience.
“If you look at the disruption going on in the business today, there are a lot of linear networks, or ad-supported networks that serve the demos that we serve today,” he said at a UBS media conference late last year. “I do think there’s an opportunity once we separate, once we have our own balance sheet and a currency, to go out and acquire some of those linear assets.”
But for now, Hirsch said Starz is focused on driving organic growth and leveraging its proprietary tech platform to support peers that are still reliant on traditional distribution models.
“We have a tech platform that we built ourselves that we can scale,” he said. “It looks a lot like the BAMtech business that Disney bought years ago.”
“What that tech platform allows us to do is help some of our linear peers that have been marooned on the linear side by actually giving them a digital product and launching them into the digital world.”
As media companies brace for a period of transition, Hirsch said Starz is well-positioned to either provide services to partners or become an attractive acquisition target itself.
“If you have a very valuable, profitable business that throws off a lot of cash, that has a unique tech platform that others don’t, of course it makes you interesting to others,” he said. “But right now, four weeks from separation, we’re really focused on just driving the core business and delivering on the guide that we gave to the Street last week.”
Starz added 530,000 US streaming subscribers in the quarter, driven by the debut of “Power Book III: Raising Kanan.” The company plans to reduce content costs and rebuild its in-house IP library to drive growth, taking a $177.4 million restructuring charge tied to this strategic shift.
“We believe Starz’s improved content slate in 2025 (after a year when the pipeline was affected by the 2023 Hollywood strikes), featuring new seasons of flagship franchises and promising new originals, could help stabilize the subscriber base,” TD Cowen analyst Doug Creutz said in a client note last week. “But this remains a ‘show me’ story until proof arrives in the form of steady quarterly performance.”
Alexandra Canal is a Senior Reporter at Yahoo Finance. Follow her on X @allie_canal, LinkedIn, and email her at alexandra.canal@yahoofinance.com.
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