NEW YORK (TheStreet) -- Starz  (STRZA) stock is up by 1.69% to $39.73 in mid-morning trading on Monday, as the company is in advanced talks to merge with movie and television studio Lionsgate (LGF), the Los Angeles Times reports.

Shares of Lionsgate are gaining by 1.84% to $39.90.

The two media companies have been holding high-level talks for several months, and have considered a number of different partnerships, according to the Los Angeles Times. 

For Starz, the deal could ultimately lend the company access to Lionsgate's big-budget productions, and for Lionsgate the deal would grant it an additional outlet for its expanding TV production business and more steady revenue sources as its "Hunger Games" movie series comes to a close this year, the Los Angeles Times adds.

Billionaire John Malone, an advocate for media consolidation, has a stake in each of the companies, which is fueling merger speculation. 

Separately, TheStreet Ratings team rates STARZ as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

We rate STARZ (STRZA) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, expanding profit margins and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow, unimpressive growth in net income and generally higher debt management risk.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Despite its growing revenue, the company underperformed as compared with the industry average of 6.4%. Since the same quarter one year prior, revenues slightly increased by 1.9%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • 48.65% is the gross profit margin for STARZ which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 15.17% is above that of the industry average.
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings results. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
  • The debt-to-equity ratio is very high at 6.62 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Even though the debt-to-equity ratio is weak, STRZA's quick ratio is somewhat strong at 1.16, demonstrating the ability to handle short-term liquidity needs.
  • Net operating cash flow has significantly decreased to -$20.20 million or 208.02% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • You can view the full analysis from the report here: STRZA