After Lionsgate (LGF) agreed to buy Starz (STRZA) for $4.4B, Bernstein says that the deal will create "significant tax-related economic benefits" for Lionsgate. Specifically, the firm estimates that the transaction will increase Lionsgate's annual cash flow by about $72M through the reduction of its tax rate. However, the firm questions the strategic value of the deal, as it thinks that the transaction undermines Lionsgate's independence and increases the risk of its production model. The firm says that it was more bullish on Lionsgate before the transaction, as it questions the "stickiness" of Starz's viewers. However, the firm thinks that the deal will be good for Liongate's stock in the short run, and it keeps a $34 price target and Outperform rating on the shares.