AMC Networks, the cable network operator that owns shows including "The Walking Dead," is back in talks to acquire billionaire John Malone's Starz, another TV programmer, according to people familiar with the matter.
The preliminary discussions may not result in an acquisition, said the people, who asked not to be named because the information is private. Mr. Malone is the largest individual investor in Starz, according to company filings.
An AMC-Starz deal would put Mr. Malone, who has driven cable and telephone industry consolidation in the past, in the thick of the action as film and TV companies weigh mergers. A combined AMC Networks and Starz would gain leverage in negotiating fees from pay-TV carriers, which have already paired off to lower costs as customers defect to online players like Netflix.
Starz, which owns the Starz and Encore premium movie channels, couldn't come to terms last year with potential buyers, including New York-based AMC Networks, because of differences over valuation, people with knowledge of the matter said last December. Starz's enterprise value has increased since then to more than $5 billion from about $4 billion, partly on speculation that Lions Gate Entertainment may buy the Englewood, Colo.-based company.
"They probably ultimately need to combine with others at least from a bundler point of view, if not from an ownership point of view," Mr. Malone said of Starz in a Sept. 11 interview with Bloomberg. "They could fit well and gain in terms of market power and in terms of quality of their offerings by combination with a number of other enterprises."
This year, Mr. Malone obtained a 3.4% stake in Lions Gate, the independent film and TV studio run from Santa Monica, Calif., in exchange for a stake in Starz. He is intrigued by Lions Gate's official domicile in Canada, where corporate taxes are lower, one of the people said.
Any deal involving AMC Networks would require the consent of the Dolan family, who control voting power at the company, according to filings. AMC Networks was spun off in 2011 from Cablevision, which the Dolans also control.
"I obviously am a fan of Lions Gate," said Mr. Malone, who added it would be a "terrific, synergistic fit" to see Starz combine with Lions Gate. "But that's not under my control. That's up to Lions Gate and an independent board at Starz," he said.
Mr. Malone's Charter Communications agreed in May to acquire Time Warner Cable in a transaction valued at $79.2 billion, including debt. In July, AT&T completed its purchase of DirecTV, the largest U.S. satellite-TV provider.
AMC Networks has long been viewed as a potential acquisition target for media companies because of its limited scale, owning the AMC channel, IFC, SundanceTV, WE TV and half of BBC America. A deal for Starz would give the company added clout in negotiations with pay-TV providers, many of which are experimenting with skinny bundles that exclude less popular channels. AMC Networks doesn't own a premium movie channel. CBS and Time Warner own Showtime and HBO, respectively.
AMC Networks acquired 49.9% of BBC America, home to "Doctor Who" and "Orphan Black," in October 2014.
Starz has been on a roll with the popularity of shows like "Outlander" and "Power." The company passed Showtime in subscribers at the end of last year, according to a June statement.
Starz would also give AMC Networks channels that are less beholden to the cable systems and their shrinking ranks of video subscribers. The commercial-free HBO and Showtime have created online-only offerings for customers who don't want costly pay-TV subscriptions.
AMC Networks' $5.3 billion market valuation has been aided by a run of hit programs, both with audiences and with critics. "Fear The Walking Dead," a spinoff of its hit "The Walking Dead," drew the largest-ever audience for a new cable series with 10.1 million viewers last month.
Still, AMC Networks has had to weather the conclusion of several of its biggest series in the last two years, including "Mad Men" and "Breaking Bad," and its subscribers have shrunk 5.2% to 93.8 million over that time, according to Nielsen data cited by Bloomberg Intelligence.