Are Lionsgate and Starz worth more apart than together?

That was the logic for separating the John Wick studio’s company, led by Jon Feltheimer, and the Outlander premium TV brand, run by Jeffrey Hirsch. In the lead-up to the spinoff, execs had touted that the separation would unlock value for investors by evaluating each business separately: For instance, Lionsgate would get credit for its 20,000-plus-title library, which throws off recurring revenue amid production downturns, and Starz would be better able to differentiate itself as a niche streaming service that still boasts millions of linear television subscribers.

It hasn’t worked out yet. Starz has seen a 24.8 percent loss in its share price since May 7. Lionsgate Studios has seen a 23.3 percent loss.

And, arguably, the move has made both companies acquisition targets, depending on what a buyer is looking for. Want to bolt-on Starz’s shows and 19 million North American subscribers to a streaming service? Or does the Wick, Hunger Games, Saw and Now You See Me intellectual property of Lionsgate appeal? Legendary, run by CEO Josh Grode, was kicking the tires on the latter M&A proposition. Speculation centers on the companies possibly partnering on some films, and potentially ahead of a more complete offer from Legendary.

On an Aug. 7 earnings call, Feltheimer talked about bringing in a partner to help run and grow Lionsgate’s management and production company 3 Arts Entertainment, with an eye to possibly reducing the studio’s debt load.

“We understand our earnings power but also understand the scale we have, that I think doing some kind of strategic transaction down the road is something that’s probably going to happen,” the CEO added. Wells Fargo analyst Steven Cahall would agree, listing Lionsgate as a M&A target in a research report.

“We view LION as an attractive pure-play studio asset that should benefit from industry M&A as strategic buyers look to beef up their content IP portfolios, plus an improving F27 slate,” Cahall wrote. On his latest analyst call, Feltheimer did not address the speculation around a Legendary partnership or takeover directly.

And despite some recent theatrical movie misses like Ballerina, Feltheimer did spend much of the analyst call touting the value of his studio’s content portfolio, its movie franchises, the stake in 3 Arts and ancillary markets like video gaming and Broadway shows to goose his studio’s appeal to possible suitors or partners.

Cost-cutting is also in focus. “In the world we’re in, we’re the only major with the scale that’s significantly less than the other majors, and I would say that speaks to the potential for us to look to figure out a way to take advantage of our earnings power, but without some of the overhead that we have,” Feltheimer said.

The same M&A chatter appears to surround Starz, home to P-Valley, BMF (Black Mafia Family) and the Power franchise. “We have a phenomenal tech backend and data stack that is unparalleled in the business. And that makes us a very valuable asset, but it also sets us up to be a very strong platform to scale around,” Starz CEO Hirsch told analysts Aug. 14.

Hirsch also, interestingly, noted that the value of Starz will become clearer as giants like Warner Bros. Discovery and Comcast spin off their declining TV assets into stand-alone companies — implying that unlike Comcast’s Versant and WBD’s unnamed SpinCo, Starz has more focus.

Hirsch added, “Given the strength of the slate we outlined, the stability of our streaming-first operating model, and our improving content cost structure, we are excited about the outlook of our business and believe Starz is the most misunderstood and undervalued stock in our sector.”

Whether that makes Starz an acquisition target for these SpinCos or a merger proposition (maybe a similarly sized AMC Networks?) remains to be seen.

This story appeared in the Aug. 20 issue of The Hollywood Reporter magazine. Click here to subscribe.