What happened
Shares of Lionsgate Entertainment (LGF-A 1.68%) (LGF-B 1.91%) jumped as much as 12.1% higher Monday morning thanks to a fresh content licensing contract with Comcast (CMCSA 0.86%) subsidiary NBCUniversal. By 10:10 a.m. EST, Lionsgate's Class A stock had retreated to a 6.6% gain while Class B shares traded 6.1% higher.
So what
In a joint press release, NBCUniversal and Lionsgate division Starz announced a long-term extension of their existing content license agreement, with a couple of new twists. The new agreement allows NBC to stream Starz content on its Peacock video-streaming service, which will launch in April 2020. The deal also cross-licenses some of NBCUniversal's content to be broadcast on the Starz premium cable network in the U.S. and the STARZPLAY streaming service abroad.
The financial terms of this contract have not been disclosed yet, and it's unclear how many years the deal might cover.
Image source: Getty Images.
Now what
This is just an ordinary content agreement for media giant Comcast, whose shares barely moved on the news, but it's an important piece of Lionsgate's long-term growth strategy. The company wants to be a part of every major video-streaming service, just as Starz is a nearly ubiquitous premium option for the majority of American cable TV subscribers. It's almost immaterial whether NBC's Peacock service is destined to be a winner or not -- Lionsgate wants to be a standard part of the evolving media landscape as it moves from cable bundles to the digital streaming realm.
It's no surprise to see Lionsgate's investors embracing this extended and expanded content deal with an important media partner.
