SCHEDULE 13D/A: Starz Entertainment Corp. Completes Business Separation, Warner Bros. Discovery Updates Stake and Governance Rights
Ownership Update and Corporate Restructuring
Warner Bros. Discovery, Inc. and Discovery Lightning Investments Ltd. have updated their beneficial ownership in Starz Entertainment Corp. following the completion of the separation of Lionsgate's studio and Starz businesses, detailing their 2.1% stake and new governance agreements.
Summary
- Starz Entertainment Corp. (formerly Lions Gate Entertainment Corp.) completed the separation of its Lionsgate Studios business from its STARZ-branded premium subscription platforms on May 6, 2025.
- This strategic separation resulted in two separately traded public companies: Starz Entertainment Corp. (holding the Starz Business) and LG Studios (holding the LG Studios Business).
- Warner Bros. Discovery (WBD) and Discovery Lightning Investments Ltd. (DLI) now beneficially own 353,334 Common Shares of Starz Entertainment Corp., representing 2.1% of the total 16,721,810 outstanding shares.
- The transaction involved a complex share exchange where former LGEC shareholders received LG Studios shares, which were then exchanged for LG Studios Common Shares and Starz Entertainment Common Shares, followed by a 15-to-1 reverse stock split of Starz Common Shares.
- DLI received its 353,334 Common Shares in exchange for its prior interests in Lions Gate Entertainment Corp. securities.
- WBD has retained the right to nominate a member to the Issuer's Board of Directors, and Mr. Marc Graboff was appointed to the Board on May 6, 2025, as WBD's designee.
- New agreements, including an Investor Rights Agreement, Voting Agreement, and Registration Rights Agreement, have been established to govern board nominations, voting restrictions, and share transfer provisions for major shareholders such as WBD, Liberty Global Ltd., and MHR Fund Management LLC.
Sentiment
Score: 7
Explanation: The document reports the successful completion of a significant corporate restructuring and the establishment of clear governance agreements among major shareholders, which generally indicates positive progress and stability for the newly separated entities.
Positives
- The completion of the strategic separation clarifies the business focus of Starz Entertainment Corp., potentially allowing for more targeted growth strategies.
- The establishment of clear governance frameworks through new Investor Rights, Voting, and Registration Rights Agreements among major shareholders (WBD, Liberty Global, MHR Fund Management) provides stability and defined rights for key stakeholders.
- Warner Bros. Discovery's continued right to nominate a board member indicates ongoing strategic interest and influence in Starz Entertainment Corp.
Future Outlook
The Reporting Persons intend to continually review their investment in Starz Entertainment Corp. and evaluate various alternatives, including potentially acquiring additional equity or debt securities or disposing of existing holdings. They reserve the right to change their investment purpose and formulate and implement plans or proposals concerning the Issuer's operations, prospects, business and financial strategies, strategic direction, and future plans, consistent with the terms of the Voting Agreement.
Industry Context
The completion of the separation of Lionsgate's studio operations from the STARZ streaming platform aligns with a broader industry trend of media conglomerates unbundling assets to unlock shareholder value and allow distinct business segments to pursue independent growth strategies. This move creates two more focused entities, potentially allowing each to better adapt to the evolving dynamics of content production and distribution versus subscription streaming services.
Management Changes
| Role | Previous Person | New Person | Effective Date | Reason |
|---|---|---|---|---|
| Member of the Board of Directors | NA | Marc Graboff | 2025-05-06 | Appointed as a designee of Warner Bros. Discovery, Inc. pursuant to the Investor Rights Agreement. |
Corporate Governance
| Change Type | Description | Effective Date | Impact Assessment |
|---|---|---|---|
| Investor Rights Agreement | A new agreement was entered into governing board nomination rights for MHR Fund Management (3, 2, or 1 designees based on ownership thresholds of 10M, 7.5M, or 5M shares respectively), Liberty Parent, and WBD (1 designee each if combined ownership >= 10M shares, or 1 collective designee if combined ownership >= 5M shares but < 10M shares). It also includes pre-emptive rights for these parties on future Common Share issuances for cash consideration. This agreement automatically terminated the existing Investor Rights Agreement dated November 10, 2015. | 2025-05-06 | Establishes clear representation on the Board for significant shareholders and provides anti-dilution rights, enhancing shareholder influence and protection within the new corporate structure. |
| Voting Agreement | A new agreement was entered into where Liberty Parent and WBD agreed to vote Common Shares exceeding 18.5% of outstanding voting power in proportion to other shareholders' votes on certain major transactions (e.g., mergers, asset sales, capital issuance, constitutional amendments). Additionally, Liberty Parent, WBD, and MHR Fund Management agreed to vote in favor of each other's director nominees as long as they have nomination rights. This agreement automatically terminated the existing Voting and Standstill Agreement dated November 10, 2015. | 2025-05-06 | Ensures a degree of alignment among major shareholders on board composition and limits the disproportionate voting power of large blocks on certain strategic matters, potentially promoting broader shareholder interests. |
| Registration Rights Agreement | A new agreement was entered into providing Discovery Lightning Investments Ltd. (DLI) with two demand registration rights and customary 'piggyback' registration rights for its Common Shares. These rights will terminate if DLI beneficially owns less than 334,436 Common Shares (approximately 2% of outstanding) and ceases to have a designated representative on the Board. This agreement automatically terminated the existing Registration Rights Agreement dated November 10, 2015. | 2025-05-06 | Facilitates DLI's ability to sell its shares in the public market, providing liquidity options for its investment in Starz Entertainment Corp. |
Related Party Transactions
- The Investor Rights Agreement, Voting Agreement, and Registration Rights Agreement are entered into between Starz Entertainment Corp. and its significant shareholders/affiliates (Warner Bros. Discovery, Discovery Lightning Investments Ltd., Liberty Global Ltd., Liberty Global Ventures Limited, MHR Fund Management LLC, and their affiliates), defining their rights and obligations regarding share ownership, board representation, and voting.
Stakeholder Impact
- **Shareholders**: The separation creates two distinct investment opportunities, potentially allowing investors to choose exposure to either the studio business or the streaming platform. The new governance agreements define the rights and influence of major shareholders, providing clarity on board representation and voting power.
- **Management**: The new corporate structure requires management to operate two independent public companies, each with its own strategic focus and operational challenges.
Next Steps
- Reporting Persons will continually review their investment in Starz Entertainment Corp. and evaluate various alternatives.
- Reporting Persons may acquire or dispose of additional equity or debt securities of the Issuer in the future, through open market or privately negotiated transactions.
- Reporting Persons may engage in communications with management and the Board, and make suggestions concerning the Issuer's operations, strategies, and future plans.
- The Issuer will include director designees from MHR Fund Management, Liberty Parent, and WBD on its slate for future annual shareholder meetings, based on their beneficial ownership thresholds as defined in the Investor Rights Agreement.
Key Dates
| Date | Description |
|---|---|
| 2015-11-10 | Date of the original Investor Rights Agreement and Voting and Standstill Agreement, which were terminated upon execution of new agreements. |
| 2015-11-20 | Date the original Schedule 13D was filed by the original Reporting Persons. |
| 2016-07-01 | Date Amendment No. 1 to Schedule 13D was filed. |
| 2017-02-10 | Date Amendment No. 2 to Schedule 13D was filed. |
| 2019-08-30 | Date Amendment No. 3 to Schedule 13D was filed. |
| 2020-03-26 | Date Amendment No. 4 to Schedule 13D was filed. |
| 2021-12-17 | Date Amendment No. 5 to Schedule 13D was filed. |
| 2025-05-06 | Date of the event requiring this filing, marking the completion of the separation transactions, the appointment of Mr. Marc Graboff to the Board, and the execution of the new Investor Rights Agreement, Voting Agreement, and Registration Rights Agreement. |
| 2025-05-07 | Date of the Issuer's Current Report on Form 8-K, which incorporated by reference the new agreements as exhibits. |
| 2025-05-08 | Date of the Joint Filing Agreement and the signature date for this Amendment No. 6 to Schedule 13D. |
Keywords
Starz Entertainment Corp., Warner Bros. Discovery, Discovery Lightning Investments Ltd., Lions Gate Entertainment Corp., Lionsgate Studios Corp., SEC filing, Schedule 13D, beneficial ownership, corporate separation, spin-off, media company, streaming platform, studio operations, investor rights agreement, voting agreement, registration rights agreement, board nomination, reverse stock split, share exchange
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