In this segment of the Motley Fool Money podcast, host Chris Hill, Million Dollar Portfolio's Jason Moser and Matt Argersinger, and Total Income's Ron Gross discuss the rumors that movie studio Lions Gate Entertainment (NYSE:LGF-A) (NYSE:LGF-B) is an acquisition target. There are a number of possible suitors. The guys weigh in and take a broader view on the state of the film and television production industry, and where it's headed.
A full transcript follows the video.
This video was recorded on Jan. 19, 2018.
Chris Hill: Shares of Lions Gate Entertainment up more than 10% this week on reports of a possible takeover. What do you think, Matty? Someone going to go out and buy themselves a movie studio?
Matt Argersinger: Actually, I think so. We've already seen this happen in the last several years. So, yeah, I'm not surprised that there's chatter out there. I think Amazon, Verizon, and it sounds like CBS, might be potential suitors for Lions Gate. And I'll say it dovetails nicely was something our own David Gardner tweeted earlier this week, that he thinks AMC Networks could be a nice acquisition candidate for Netflix. But I have to say, I don't see Lions Gate, I don't see AMC, I don't see Scripps Networks, Discovery, I don't see these as independent companies in a few years.
If you think about where things are going, it's really gravitating to the big platforms. And it's amazing to say this now, because we wouldn't have said this five years ago, but to me, it's coming down to Netflix, Amazon and Disney, now that Disney has acquired Fox. And I think all the smaller players are probably going to get gobbled up by them, because these companies are looking for content, quality content. And you have Lions Gate, AMC and others with that kind of content.
Hill: When I think about Lions Gate, the first thing that comes to mind is The Hunger Games, which, that ship has sailed in terms of their ability to really monetize that franchise. Whereas with AMC, their track record, I think, is much stronger, in terms of delivering, particularly television, hits. Breaking Bad, Mad Men, The Walking Dead, that sort of thing. Those companies are roughly the same in market-cap size.
Argersinger: Yeah, $3 billion.
Hill: So if someone's looking to buy them, isn't AMC the move here?
Argersinger: Well, it depends. I think Lions Gate has some really nice strengths when it comes to creating films on a budget. They do it economically better than, really, any other studio out there. So, I think there's qualities to both. I wouldn't be surprised if both are acquired within the year.
Hill: You're saying Lions Gate may not be making the Marvel franchise movies, but they're also not going to have a John Carter-type bomb?
Argersinger: Exactly. [laughs]
Ron Gross: Good old John Carter.
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Chris Hill owns shares of Amazon and Walt Disney. Jason Moser owns shares of Walt Disney. Matthew Argersinger owns shares of Amazon, Netflix, and Walt Disney. Ron Gross owns shares of Amazon and Walt Disney. The Motley Fool owns shares of and recommends Amazon, AMC Networks, Discovery Communications, Lions Gate Entertainment Class A, Lions Gate Entertainment Class B, Netflix, Verizon Communications, and Walt Disney. The Motley Fool recommends Scripps Networks Interactive. The Motley Fool has a disclosure policy.