STUDIO, STARZ ADMIT MERGER TALKS

Lionsgate and the cable channel confirm wide speculation that they’re exploring a possible tie-up.

Lionsgate and premium cable channel Starz have officially acknowledged their courtship, again raising the possibility of a long-anticipated merger.

In a Thursday regulatory filing, Starz said the studio behind the “Hunger Games” movies “intends to explore whether there is a potential mutually beneficial combination of the two companies.”

Speculation has long swirled about potential tieups between Starz and Lionsgate, one of the few publicly traded movie studios that is not part of a larger conglomerate. The Los Angeles Times reported in October that the companies had held high-level talks about the possibility of a deal for several months.

The new disclosure comes about a year after media mogul John Malone acquired a minority stake in Lionsgate through a stock swap with Starz, which Malone also backs.

The filing suggests that the discussions are in the early stages and that a deal is not certain, but that the companies are exploring a number of deals that could benefit shareholders of both firms.

Analysts have said a Lionsgate-Starz merger would mark a major step in Malone’s ambition to create the next big media company and sweep up what he has called “free radicals” in the entertainment industry.

A deal could also benefit both companies, analysts say.

Lionsgate would get another outlet for its growing TV-production business, which already makes shows, including “Orange Is the New Black” for Netflix and “Nashville” for ABC.

For Starz, the deal with Lionsgate could eventually give the channel access to the studio’s big-budget productions at a time when cable companies need content to compete with rivals. Though its headquarters are in Santa Monica, Lionsgate is legally based in Canada, meaning there are tax advantages for Starz in a merger.

Still, Cowen & Co. media analyst Doug Creutz expressed reservations about the potential deal, noting that Lionsgate already has plenty of outlets for selling its shows and movies. Additionally, Lionsgate’s stock has declined since the final “Hunger Games” installment hit theaters in November. “We remain skeptical about the merits of such a merger,” Creutz wrote in a research report. “At the same time, though, this announcement will likely reignite speculation ... about John Malone’s plans for media consolidation via Lions Gate.”

Starz shares rose $2.04, or 7%, to $31.23 on Thursday. Lionsgate shares fell 18 cents, or 0.7%, to $25.45.

Lionsgate also announced third-quarter earnings Thursday after the close of the U.S. financial markets. The results fell short of analysts’ expectations. The company reported net income of $40.7 million, down nearly 60% from $98.2 million during the same quarter last year because of lower-than-expected theatrical film results. Executives are set to hold a conference call with analysts Friday morning.