Crowded is good. SAC Capital is not the only hedge betting on Starz, one of the top performing funds in 2012 has over 15% of its 13F portfolio invested in the company (read more about the hedge fund). Cohen's investment in Cohen also comes only days after Gates Capital announced a 5.9 million stake in the company. Worth noting is that billionaire John Malone, Chairman of Liberty Media, owns 11.2 million shares per a January 13D filing. Other top hedge funds owning Starz includes Jana Partners, D.E. Shaw and David Einhorn of Greenlight Capital (check out details on Greenlight's partner letter). Although a crowd can generally be a bad thing, that is not the case with Starz. I believe the more the merrier, as these hedge funds and billionaire investors will strive to unlock the most shareholder value for investors, including the possibility of an acquisition (check out all the hedge funds owning Starz).
Over the interim, the company should be able to able to see price appreciation as investors realize Starz's depressed valuation, especially with billionaire investors taking notice. Beyond that, there is the potential for a takeover. Eugene Huang of Artemis Capital had this to say about the likelihood of Starz being acquired...
Starz will be the only standalone premium pay TV channel. HBO is owned by Time Warner, and Showtime by CBS. It doesn't make any sense to stand alone on its own. Starz could easily be acquired by Disney or Sony, News Corp, Viacom, Time Warner, CBS, or Comcast/NBC. DirecTV previously tried to acquire Starz in 2009 but couldn't agree on a valuation. Management has already indicated that this is a possibility already being explored.
It is quite possible that Netflix didn't aggressively bid on Sony pictures knowing Disney will take over Starz. That way Netflix will rip the benefits of having a deal with Disney and Disney will get two birds with one stone. Makes perfect sense. Watch out for bidding war for Starz now. Either way this is a great position for Starz longs!