Starz is taking a so-called “poison pill” after media mogul Byron Allen acquired 10.7 percent of the company last week in a surprise deal.
A poison pill, also called a shareholder rights plan, is typically enacted by companies seeking to ward off hostile or unwelcome takeover efforts. The plan adopted by Starz would kick in if any shareholder acquired 17.5% of the company’s shares, and would allow other shareholders to buy shares in the company at a 50% discount, effectively diluting the activist.
The plan is usually to force conversations with the activist to better understand their motivations and intentions.
Allen, through his family office, paid $25 million for the stake in Starz, which was spun off from Lionsgate last year, from the investment firm Liberty 77 owned by former Treasury Secretary Steven Mnuchin.
Mnuchin was a major investor in that company, and joined Lionsgate’s board of directors earlier this year. However, his interest appears to be in the studio, not the pay TV and streaming business that Starz operates in, hence the sale.
However, Allen is still a big believer in pay TV and streaming, thanks to the Weather Channel and some local TV stations and streaming platforms like HBCU Go. Starz would fit right in with those interests, and his family office has indicated he could be an active player.
“Consistent with these investment purposes, Allen may make contact with, but not limited to, one or more Starz shareholders, Starz management and/or one or more members of Starz’s board of directors and may make suggestions or proposals regarding Starz’s operations, prospects, business and financial strategies, strategic transactions, assets, liabilities, business alternatives, financing, board composition and other matters that Allen may deem relevant to an investment in Starz,” his family office wrote.
However, Starz’s poison pills meant that if he wanted to make a move, he would most likely have to talk to the company’s board of directors first.
