On Thursday, Shares of Viacom, Inc. (NASDAQ:VIAB), added 0.04% and now trading at $45.34 in the current trading session. The current trading range of the stock ranges between $44.42 and $45.46.
Metro-Goldwyn-Mayer (“MGM”), Viacom Inc. (Nasdaq: VIAB, VIA), (“Viacom”) and Lionsgate (LGF.A, LGF.B), the founding members of the premium pay television network, EPIX, recently declared a contract for MGM to acquire the 80.91% aggregate membership interests in EPIX held by Viacom, Paramount and Lionsgate for about $1.032 billion, based on a total value for the company of $1.275 billion (inclusive of $75 million of distributions to the partners). Viacom and Lionsgate presently own 49.76% and 31.15% equity interests, respectively.
This transaction advances MGM’s planned growth programs, closely following the company’s recent expansion of its premium content capabilities with its 2016 acquisition of United Artists Media Group. The deal will give MGM control over EPIX’s four linear pay television channels (EPIX, EPIX2, EPIX Hits, EPIX Drive-In) which are available across the U.S. via cable, satellite and telco distributors. EPIX is also available through a range of digital distributors.
The fastest-growing premium network over the past 5 years, EPIX offers the leading selection of movies available on any network, with about $4 billion in box office hits. As part of the transaction, Paramount Pictures and Lionsgate will continue to provide their first-run theatrical releases to EPIX under multi-year agreements. EPIX’s content also features original programming counting its critically acclaimed original series Berlin Station, Golden Globe nominated Graves and, premiering in 2017, Get Shorty, in addition to original documentaries, music and comedy specials. Launched in October 2009, EPIX pioneered the development and proliferation of “TV Everywhere,” allowing subscribers to watch the content they want, when and where they want.
“The addition of EPIX provides MGM with a premier distribution platform that complements our strong stable of new and library content in both film and television. The acquisition creates raised revenue diversity, new opportunities for growth, and earnings accretion for the benefit of stockholders,” said Gary Barber, Chairman and CEO of MGM. “I would like to thank Jon Feltheimer and his colleagues at Lionsgate and Bob Bakish and his colleagues at Viacom and Paramount, for their unwavering commitment to building the value of this premium service, and their continued commitment to provide their theatrical releases for years to come. We also look forward to welcoming Mark Greenberg and his team to the MGM family. With Mark’s strong leadership and dedicated administration team, EPIX’s innovative platform and premium film and television content, EPIX is well positioned to capitalize on the evolving patterns of content consumption in a dynamic distribution landscape.”
Bob Bakish, President and Chief Executive Officer of Viacom, said: “Together with our partners, we are proud to have built EPIX into a strong, differentiated and valuable brand. As Viacom executes against its new strategy, we welcome the opportunity to strengthen our balance sheet by realizing the value of our equity investment, while also extending the successful commercial partnership between EPIX and Paramount Pictures with a new multi-year output agreement. MGM will be an outstanding steward of the network, and we look forward to working with EPIX to bring its subscribers even more premium entertainment for years to come.”
“With our partners at MGM and Viacom, we are proud to have built a technologically advanced, consumer-facing platform driven by great content,” said Lionsgate Chief Executive Officer Jon Feltheimer. “Though we are shifting our investment focus to our wholly-owned platforms, we wish CEO Mark Greenberg and the rest of the EPIX team, together with Gary Barber and his colleagues at MGM, great success in continuing EPIX’s strong growth in the future.”
The transaction is subject to regulatory approval and is anticipated to close this month.
Commenting on the transaction, Mark Greenberg, President and CEO of EPIX said, “This agreement between our founding partners MGM, Lionsgate and Viacom reflects the noteworthyvalue already created in this joint-venture, while acknowledging the accelerated growth potential of EPIX with a single, focused and committed owner. We are proud to have built this very successful business and we want to thank our partners for their investment, planned engagement and support since our founding. The Lionsgate and Viacom priorities have evolved in recent months, and now is the right time for them to capitalize on their initial investment and focus their attention on their other businesses, while they continue to provide EPIX with great studio movies and original series for years to come. As we look forward, we are excited about the future of EPIX as a wholly-owned business of MGM. Gary Barber and the team at MGM have the resources, understanding and dedication to our near and long-term success that are essential in this rapidly evolving media and entertainment landscape where the power of great content is critically important.”
MGM is the home to such hit television series as the Emmy® Award and Golden Globe® Award winning limited series “Fargo” on FX; the critically acclaimed epic drama series “Vikings” on HISTORY; the fan favorite drama “Teen Wolf” on MTV; and the highly-anticipated dystopian drama series “The Handmaid’s Tale” on Hulu; MGM has several series in production counting “Get Shorty” for EPIX and will begin production on “Condor” for AT&T’s Audience Network.
LionTree Advisors served as financial advisor to Viacom and Lionsgate. Latham & Watkins LLP served as legal advisors to MGM, Shearman & Sterling LLP served as legal advisors to Viacom and O’Melveny & Myers LLP served as legal advisors to Lionsgate.
Analyst recommendation for this stock stands at 2.50.