Lionsgate CEO Jon Feltheimer still likes most of what Netflix is doing, but thinks it’s missing some key revenue opportunities. In fact, he’s dusting off a Knives Out deal that Netflix declined once, but should take now, given that, you know, everything has changed. And I think he’s right.

Feltheimer discussed the deal during an onstage conversation at the SeriesFest in Denver on Friday, part of a string of candid observations on the state of the industry from one of its longest-tenured top executives. While Feltheimer’s proposal would certainly be very good for Lionsgate, it and other deals like it also might be a better way out of Netflix’s challenges than trying to build a whole new ad-based product over the next couple of years, which executives said the company is exploring after a crummy first quarter.

The deal would basically create a partnership around the hit Knives Out movie, which grossed $311 million for Lionsgate at the box office, with two sequels now under production for Netflix. Let Lionsgate distribute the theatrical on the new films and Netflix can stream the original, Feltheimer said.

“‘We’re going to make a lot of money; we’ll distribute it, we’ll take a distribution fee, send it back to you,'” Feltheimer said he told Netflix executives including Co-CEO Ted Sarandos. “It’s an interesting, organic idea for them. They thought about it and they said, ‘No.’ That was then and this is now. So, I’m going to go back to them. Same idea, Ted.”

Among other things, Feltheimer’s approach could be implemented far more quickly than building an ad-sales offering from scratch, which Co-CEO Reed Hastings acknowledged might take two years.

More importantly, while Feltheimer’s proposal would be a shift in thinking for Netflix, it’s nowhere near as problematic or transformative as the switch to a cheaper, advertising-based new product designed to capture a broader share of the market and generate some revenue. The changes an ad-based service would require are “scary” for one long-time champion of Netflix, analyst Rich Greenfield of LightShed Partners.

“It's introducing a different kind of product to the people and you don't know how that will be received,” Greenfield said on The Anklers podcast last month. “Like, none of the Netflix originals were even thought about with ad breaks built in. But you start to put ad breaks in and … I don't know if you've watched Hulu with advertising lately, the advertising is literally horrible. All it does is hurt engagement.”

Feltheimer’s proposal would leverage Lionsgate’s long experience distributing films theatrically and widely, compared to the brief and rather indifferent releases Netflix gives awards contenders and a few franchise features.

Even the Netflix films getting a theatrical release are generally limited to a few hundred arthouse and independent screens, because many chains refuse to show even the company’s future Oscar winners. The chains remain unhappy because Netflix won’t give those films an adequate exclusive release window. But that was before the pandemic scrambled everything.

Hollywood studios and theaters have roughly settled on a much shorter exclusive window, 45 days or less. And they’re moving away from sending most projects directly to streaming. Joining that trend would give Netflix a badly needed new revenue stream, while raising the visibility of those projects even with streaming audiences.

Lionsgate has done a lot of business with Netflix, beginning with one of the service’s OG breakout series, Orange is the New Black. The mini-major continues its arms dealer ways, producing shows for many Hollywood studios, including both sides of what’s now Warner Bros. Discovery (WBD CEO David Zaslav is also a former Lionsgate board member).

Restarting a Netflix conversation over Knives Out isn’t Feltheimer’s only deal in progress. The company has been trying to sell itself for quite a while, and in November said its premium channel/streaming service Starz is available for sale as a standalone. After months of crickets, this past week Roku and the big “alternative investment” fund Apollo Global Management announced they’re seeking a minority stake of up to 20% in Starz.

Such a deal could generate more high-profile programming for the Roku Channel as it tries to differentiate from ad-supported competitors.

Starz has built a loyal audience by catering to Black and female fans of franchises such as Power and Outlander. More recently, Starz debuted behind-the-scenes Watergate tale Gaslit, starring Julia Roberts, and horror-comedy series Shining Vale, starring Courteney Cox and Greg Kinnear. All those shows likely would be a step up from the Quibi leftovers Roku bought in 2021 (Roku also recently signed a deal in the Pay 2 window for Lionsgate movies, among a set of other original-content agreements).

The deal also gets Apollo engaged in both Starz/Lionsgate and Roku. Apollo has $513 billion in assets under management, according to last week’s quarterly earnings filings, and $48 billion in available cash for deal-making. Apollo also has specialized in scooping up media companies in struggling sectors, including Sirius, Cox, Endemol Shine, Gannett, Redbox, and Yahoo. Given Roku’s 80% plunge in share prices since last year, a deep pocket might be as appreciated as much at Roku as at Lionsgate.

Regardless, some new thinking is needed in the streaming industry at large, Greenfield suggested.

“I think there's some really, really hard industry questions that every one of these CEOs needs to be thinking about,” he said. “Because if you're not going to get Wall Street respect for investing in streaming, and the margin profile is going to be lower, because …even if there are 800 million or a billion subscribers, it's much, much further out in the distance than you expected, at a lower ARPU than you expected. That is a big problem for everyone in this industry… that no one's talking about. And I sort of joke like, what's Plan C? A was legacy, B was streaming. I don't know what plan C is. That's what I think is panicking investors. Other than sell your company, what is the next alternative?”