Lions Gate Entertainment Corp. intends to merge with the premium cable network Starz after a quite long time talk.  

Starz said in a filing Thursday with the Securities and Exchange Commission as stated in USA Today that Lions Gate has told Starz that it intended to explore whether there was a potential mutually beneficial combination of the two companies.

The discussion started since months ago. Lions Gate reported a stock swap with Starz, bringing about Lions Gate holding Starz shares for around 4.5% and voting shares for 14.5% in February last year.

Besides that, the agreement brought top shareholder from Starz, Liberty Media Chairman, and cable industry legend John Malone, to the directors' board of Lions Gate. Malone also has delivered his willingness to consolidate the two companies.

Biz Journals mentioned that Lions Gate's profit dropped sharply in the third quarter partly because of the film "Hunger Games", which did not gain as expected. Net income in the quarter ended December 31 fell 59 percent into $40.7 million, or 27 cents each share. It was compared to the previous year net income that reached $98.2 million or 70 cents each share. While its quarter revenue plunged to $670.5 or 11 percent. Lions Gate stock dropped to $17.73 or 30 percent per share after the news by late Friday.

Chief Executive Jon Feltheimer mentioned, "While the performance of our theatrical film slate resulted in softer than anticipated results, our other businesses performed strongly in the quarter. With our television business continuing its robust topline and margin growth, a deeper and more diversified film slate with lower costs and contributions anticipated from recently launched businesses, we have a clear path to resume our strong and sustainable financial trajectory in fiscal 2017."

Meanwhile, the Wall Street Journal stated that in 2014 Lions Gate had looked for an agreement with Starz, however, the two couldn't settle agreeable terms on valuation and tax issues. Mr. Malone has declared his interest in the consolidation due to Lions Gate base in Canada that has lower taxes.

The two companies agreed to hold up for three years after Starz's spinoff from Liberty Media Corp, which fell in January. And now, there are still some other problems to handle, including the valuation agreement. Since November, Lions Gate shares have lost more than 33% of their value since November, in the middle of a general decrease in media stocks. While at the same time, Starz shares drop around 9%.

It is obvious that Lions Gate and Starz still have some homework to do before they come to a consolidation deal officially. However, Lions Gate' merger to Starz is thought to be a smart move in the changing media setting. The two companies will continue exploring a potential consolidation between them.