NEW YORK (TheStreet) -- Lions Gate Entertainment (LGF) stock is declining 2.15% to $20.49 in afternoon trading on Thursday after the movie production company agreed to buy Starz (STRZA) for $4.4 billion in cash and stock.

"This is a good deal," TheStreet's Jim Cramer said on CNBC's "Squawk on the Street" this morning.

Cramer told his co-host David Faber that Lionsgate's stock was at $41 last October when Faber reported that the company could be in talks with Starz.

Lionsgate's stock has plunged more than 40% since then, but opened higher at $23 earlier today, which could indicate that more mergers could happen in the entertainment industry, Cramer explained.

"This is another level of consolidation we're seeing," Cramer noted. "I think that when you see that Lionsgate stock is up, it's going to make some people want to contact bankers and say, 'Hey, maybe this is our way out of this jam that we're all in.'"

"This is a deal made in heaven for both companies," Cramer added in the video, above.

Starz stock is gaining 7.50% to $30.37 this afternoon.

Separately, Lions Gate Entertainment has a "hold" rating and a letter grade of C at TheStreet Ratings because of the company's revenue growth and expanding profit margins, which offsets deteriorating net income, generally higher debt management risk and disappointing return on equity.

You can view the full analysis from the report here: LGF

TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this article's author.

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