Starz Implements Poison Pill Strategy Following Byron Allen’s Major Stake Purchase

Starz Entertainment Adopts Shareholder Rights Plan Following Allen’s Stock Acquisition

Starz Entertainment announced on Wednesday that its board of directors has unanimously approved the adoption of a limited-duration shareholder protection rights agreement, commonly referred to as a “poison pill.” This protective measure takes effect immediately and will expire in one year.

The decision follows Byron Allen’s recent acquisition of a significant stake in the company. Allen, the founder and CEO of Allen Media Group, disclosed a 10.7% ownership in Starz last week, purchasing 1.8 million shares for $25 million. The new rights agreement is a defensive strategy that complicates stock purchases exceeding a specified threshold, typically deterring hostile takeovers. In this instance, the rights will be activated if an individual or group acquires a 17.5% ownership stake in Starz. Existing shareholders will be allowed to purchase additional shares at a steep discount, consequently diluting both the value and voting power of any new shares acquired over that limit.

Jeff Hirsch, CEO of the newly public Starz, highlighted the company’s growth after separating from Lionsgate Studios last year. Notably, Lionsgate has a shareholder rights plan set to expire in May.

The rights plan at Starz may be extended through a shareholder resolution until March 10, 2029, but it can also be terminated or amended earlier by the board.

“The Board determined to adopt the Rights Plan as they believe it is in the best interest of the Company and allows it to pursue its long-term strategic plan and maximize value for all shareholders,” the company stated. “Poison pills reduce the likelihood that any person or group can gain control of the company’s shares without appropriately compensating shareholders for that control.”

Under the newly established plan, Starz will issue one right for each common share currently outstanding. These rights would generally be exercisable only if a person or group acquires 17.5% or more of the company’s outstanding shares. Those who already own more than this percentage may maintain their position without triggering the plan unless they acquire additional shares.

If the rights are exercised, all holders—except for the individual or group that triggered the plan—will be entitled to buy common shares at a 50% discount to the current market price, or the company may exchange each right for one common share.