Film

MGM to buy full control of EPIX

For slightly over a billion

It was announced today by Metro-Goldwyn-Mayer that the studio will acquire the 80.91% aggregate membership interests in EPIX, currently held by Viacom, Paramount and Lionsgate. The purchase price for the shares sits at approximately $1.032 billion. That sum is based on a total value for the company of $1.275 billion (inclusive of $75 million of distributions to the partners). Viacom and Lionsgate currently own 49.76% and 31.15% equity interests, respectively.

This transaction advances MGM’s strategic growth initiatives, 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 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 increased 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 management 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, along 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 significant value 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, strategic 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.”

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.