Liberty\'s Spinoff of Starz Was Firmly Denied Only a Month Ago

By AMY CHOZICK

“There are no plans on Starz at this time other than to grow it.” That's what the chairman of Liberty Media, John Malone, told a New York Times reporter last month at the Sun Valley, Idaho, media conference.

On Wednesday, Liberty said it would spin Starz, the pay-TV network, into a separate company. The spinoff will make it easier for another company to absorb Starz, which seeks to compete with HBO and Showtime for lucrative subscription fees.

Mr. Malone repeatedly denied Liberty was considering a spinoff when asked about it in the bar of the Sun Valley resort July 11.

In a statement, Greg Maffei, the president and chief executive of Liberty, said spinning off Starz would “provide better transparency on the Starz operating business; optimize the Starz capital structure; permit us to better pursue our strategic objectives.”

In theory, a channel like Starz makes a valuable proposition for media companie s who want to compete in the pay-TV space. But lately, the channel has struggled to create the kind of hit shows that generate attention and increase subscriptions.

Starz, which is run by Chris Albrecht, the former wunderkind of HBO who oversaw that channel during its salad days of “The Sopranos” and “Sex and the City,” is best known for its shows “Boss” and “Magic City.” It recently canceled the blood-and-skin series “Spartacus,”  which was approved before Mr. Albrecht took over and was said to not fit his creative sensibilities.

Starz had 20.7 million subscribers at the end of its second quarter. Its second-quarter revenue was $403 million, virtually flat from the same period in 2011.

Lots of names have been floated as potential Starz buyers, though no clear suitor has emerged. Media bankers have said they see the channel as fitting into the portfolio of companies as varied as News Corporation, which unli ke CBS Corporation and Showtime, doesn't own a pay-TV channel; and Netflix, which is investing heavily in the types of original programs Starz makes.

Amy Chozick is The Times's corporate media reporter. Follow @amychozick on Twitter.