The three studios that own premium cable TV channel Epix -- Viacom's (VIAB) Paramount Pictures, Lions Gate (LGF) and MGM -- could file to take it public, according to three people with knowledge of conversations between the partners and investment bankers.
The combination cable and internet streaming service also has been contacted by potential suitors that include other studios, foreign interests and Silicon Valley companies, the sources said. Epix's partners have not received offers, however, and there are no talks underway, they say.
The interest has increased since June 30, when Lions Gate announced a $4.4 billion acquisition of Starz (STRZA) , whose assets include a pair of premium cable channels with a combined 56 million subscribers and a streaming service. That deal is expected to close shortly after Wednesday, when the two companies have scheduled separate shareholder meetings.
Lions Gate CEO Jon Feltheimer told analysts after the deal was first announced that his company's 31.2% interest in Epix "is not truly a strategic platform for us."
The company, which suspended its dividend following the announcement of the acquisition, will take on nearly $2.9 billion in new debt as part of the deal, it said in financial filings.
"I think our partners over there have known about the possibility of this transaction for some time," Feltheimer added during the conference call. "I look forward to having conversations with them about maximizing our mutual investment."
Talks could be accelerated if, as expected, Viacom merges with CBS (CBS) . CBS owns premium channel Showtime, which has more than 23 million subscribers, according to SNL Kagan.
The boards of CBS and Viacom hired advisers in early October to investigate a reunion of the two companies, which were separated in 2005 and are controlled by billionaire investor Sumner Redstone and his daughter, Shari. The Redstones proposed recombining the companies.
"We have tremendous optionality with Epix," Lions Gate Vice Chairman Michael Burns said during the company's most recent earnings call. "We'll be having conversations with Viacom. Obviously, things are going on over there. We'll have to see how that works out and with our partner in MGM."
Started in 2009, Epix is solidly profitable. It has around 14 million subscribers and could be valued at $3.5 billion or more, based on current multiples for media companies. Since 2013, it has generated $397.1 million in earnings, including $164.6 million in 2015, according to Lions Gate's financial filings.
On Nov. 4, the partners renewed the contract of president and CEO Mark Greenberg, who designed Epix's business plan, insuring continuity if they decide to take the service public.
And Epix still has potential growth ahead of it. It does not have deals with cable giant Comcast (CMCSA) or AT&T's (T) DirecTV satellite service and is available in only 50 million homes, the company said, or just under half the 118.4 million U.S. homes that Nielsen estimates have television.
Complicating Lions Gate's exit from Epix, though, is the studio's receipt of an estimated $100 million a year from the service for its films and TV shows, which includes original comedy Graves, starring Nick Nolte as a former U.S. president who goes on a quest to repair the wrongs of is administration.
Lions Gate, like the other partner studios, has three years remaining on its deal to provide output to the service.
Lions Gate shares Monday morning were up 1.5% to $23.05.