A report from Bloomberg that AMC Networks Inc. (AMCX - Get Report) is considering making an offer for Starz (STRZA)  ultimately rests on the opinion of one man: John Malone.

Malone, who wears many hats including Starz's largest shareholder and the chairman of Liberty Media (LMCA) , has hinted in recent months that the premium-TV channel might link up with another media company. A merger makes sense considering that Starz will stop receiving content from Disney (DIS - Get Report)  beginning next year, putting pressure on the company to obtain high-quality content as it competes with Netflix, Time Warner's TWX HBO NOW and a yet unveiled streaming platform from Apple (AAPL - Get Report) .

"Malone's motivation would be that Starz is a nice business, but its not on the scale of something like HBO when it comes to buying content," Rich Tullo, a media analyst with Albert Fried & Co., said in a phone interview. "Malone would want to do something to get Starz out of that middling space.

Investors appeared to like the notion that Starz could find a partner in AMC, the creators of prestige dramas Breaking Bad and Mad Men, but both shows concluded their runs within the last year. Combining AMC with Starz's top shows led by Patrick Stewart's new comedy Blunt Talk, the business drama Power and the time-travel fantasy Outlander, could make for a more formidable player in a media industry that has become far more crowded that in past years when HBO, CBS's Showtime and Starz were the leading creators of premium TV.

"One of the reasons he [Malone] might be in a position to cast off Starz, so to speak, might be the competition in the video space," said Jimmy Schaeffler, president of the Carmel Group, a media and telecom consultancy in Carmel, Calif. "Pay-TV options from broadband [providers] and over-the-top-streaming are attractive, but also challenging and this may be a battle [Malone and Starz Chief Executive] Chris Albrecht don't want to fight.

Speaking on CNBC Wednesday, Albrecht didn't say anything about Malone's role in a possible sale of Starz, and he wasn't going to make any announcements about a possible tie-up with AMC. However, Albrecht said such talk only supports the strength of Starz's position among the premium TV networks.

"I do think there is a good business rationale for different companies coming together, and that's the beginning of any conversation around a deal," Albrecht said. "I don't think that comes out of weakness, though, I think that comes out of opportunity."

Shares of Englewood, Col.-based Starz were gaining 5.7% to $40.99. AMC was slipping 1.1% to $73.33.

Earlier this year, Malone sold a 4.5% stake of his Starz holdings to Lions Gate, and obtained a 3.4% share of that movie and TV studio in a move that was viewed as possibly setting Starz up for a merger with the Epix network, which is part-owned by Lions Gate Entertainment (LGF) .

Whether any deal will come to fruition remains a mystery. Tullo estimates that there's about a 50% chance that AMC will acquire Starz, but that such a tie up would benefit both networks, and make Malone an even bigger player in the TV network industry.

"[A possible deal] benefits AMC because it gives them a new revenue stream with a subscription TV-network," Tullo said. "For Starz, it could give them a bigger digital footprint, and their margins would go up with this deal."

Starz has seen its profile rise this year, as the network recently reached 23.7 million subscribers to surpass Showtime (CBS - Get Report) as the No. 2 premium TV network, according to research firm SNL Kagan. For the year, Starz's shares have gained 38%.

 

 

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.