CBS, Lionsgate Continue Starz Talk: CNBC

(RTTNews) - CBS corp. (CBS-A, CBS) will continue talks to buy Lionsgate Entertainment's (LGF-A, LGF-B) pay-TV channel Starz, CNBC reports.

CBS had earlier offered $5 billion for the premium channel, which was rejected, as Lions Gate board felt the offer undervalued Starz. No banks have been hired, as talks are still in initial stages.

Meanwhile, Lionsgate executives believe the company fits well within CBS and are open to the idea of selling to CBS or a combined CBS-Viacom at a higher price, the report says. CBS isn't interested in buying the entirety of Lionsgate. CBS will also continue its merger discussions with Viacom.

If Lionsgate sell Starz to CBS, then it would probably explore options as it would not make sense to be a standalone company without the premium channel. The company will seek to merge with MGM, the closely held entertainment company owned by Anchorage Capital.