Light Reading
With renewal talks scotched, Netflix's streaming deal with Starz will burn out at the end of February

Netflix, Starz on the Outs

Jeff Baumgartner
LR Cable News Analysis
Jeff Baumgartner
9/1/2011
50%
50%

Starting March 1, 2012, Netflix Inc. (Nasdaq: NFLX) subs will no longer be seeing Starz.

The premium programmer announced Thursday that it has scuttled renewal negotiations with the Internet streaming giant when their current deal expires on Feb. 28, 2012.

"This decision is a result of our strategy to protect the premium nature of our brand by preserving the appropriate pricing and packaging of our exclusive and highly valuable content," Starz Entertainment LLC President and CEO (and former HBO chief) Chris Albrecht said, in a release. "With our current studio rights and growing original programming presence, the network is in an excellent position to evaluate new opportunities and expand its overall business."

Netflix has been paying $30 million per year for Starz fare and had even conceded to conditions that keep new Starz titles out of Netflix's hands until 90 days after they appeared on the premium programmer's linear service. It's been rumored that Starz could have commanded more than $200 million per year under a new deal. (See Netflix to Wait 90 Days for New Starz Fare .)

Netflix did not have an immediate comment.

Why this matters
Cable operators and other pay-TV providers are likely cheering this on. Many MSOs were upset with Starz when it struck the Netflix deal in 2008, arguing that the deal diluted their product and would cause subscribers to drop Starz because they could get the same content from Netflix for less. The 90-day delay helped, but MSOs still felt stung.

Netflix, which jacked up prices on its subscription plans Thursday, will end up losing an anchor tenant in Starz next year (it'll still have Epix's content), but investors might be pleased that the video streamer won't pay -- or perhaps overpay -- just to get a new deal. Netflix can now apply more of those funds to expanding its library of older fare or pumping more cash into exclusive, original programming that could help it stave off the risk of increased churn it will face when the Starz deal dies out. (See Netflix Shopping for Original TV Series.)

For more
Read more about Netflix.

— Jeff Baumgartner, Site Editor, Light Reading Cable

(7)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View
Jeff Baumgartner
50%
50%
Jeff Baumgartner,
User Rank: Light Beer
12/5/2012 | 4:54:52 PM
re: Netflix, Starz on the Outs


Netflix stock got creamed in after hours because of this. Churn there is expected to rise because of the new rate hikes, but some see the coming loss of Starz content as a double-whammy.  How important do you think Starz content is for Netflix subs?  I'd have to guess that most will still see lots of value in the service, and those who don't leave due to the new pricing will likely stay on despite the loss of Starz. But Starz sure picked a hell of a time to drop this news. Kick 'em while they're down, why don't you? JB

shygye75
50%
50%
shygye75,
User Rank: Light Beer
12/5/2012 | 4:54:52 PM
re: Netflix, Starz on the Outs


To steal a line from Rene Magritte: This is not an Apple. Netflix needs content more than content providers need Netflix.

Jeff Baumgartner
50%
50%
Jeff Baumgartner,
User Rank: Light Beer
12/5/2012 | 4:54:51 PM
re: Netflix, Starz on the Outs


Right, content is king... unless you are the overlord who can do anything. Netflix will have some gaps to fill here. I just wonder if subs will care more about this news about Starz or the price hikes... i'd guess it's the latter. I'm not going to churn out yet; i'll give them a chance. JB

rjmcmahon
50%
50%
rjmcmahon,
User Rank: Light Beer
12/5/2012 | 4:54:50 PM
re: Netflix, Starz on the Outs


For Netflix to be an Apple it would need to:

<ul>
<li>Sell an overpriced consumer gadget that plays pirated works taken from the internet (such as from bit torrent) which is also a a status symbol</li>
<li>Share revenues from that gadget with the entertainment industry</li>
<li>Have a place on the board of a major media company and convince them either distribute their content using a Netflix proprietary DRM system or else they will be pirated out of existence</li>
</ul>

Netflix can't do the first step without being sued into bankruptcy so I wouldn't hold my breath.

shygye75
50%
50%
shygye75,
User Rank: Light Beer
12/5/2012 | 4:54:50 PM
re: Netflix, Starz on the Outs


Netflix is not an Apple, said Magritte. It's not even a Comcast or a Cablevision. There's absolutely no pain involved in churning out of Netflix, and there are any number of options to that service. I don't think we've reached the point that anyone fears Netflix, and without that fear factor Netflix is in for a difficult transition.

digits
50%
50%
digits,
User Rank: Light Beer
12/5/2012 | 4:54:49 PM
re: Netflix, Starz on the Outs


Wasn't it Magritte who wrote "Ceci n'est pas une bit pipe?"

shygye75
50%
50%
shygye75,
User Rank: Light Beer
12/5/2012 | 4:54:48 PM
re: Netflix, Starz on the Outs


That may have been Rene's brother, Ivan.

Flash Poll
From The Founder
It's clear to me that the communications industry is divided into two types of people, and only one is living in the real world.
LRTV Huawei Video Resource Center
Interview With Rick Talbot, Principal Analyst, Current Analysis

10|31|14   |   2:12   |   (0) comments


At the NFV Open Cloud Forum 2014, Rick Talbot shared his positive feedback about the holistic and open approach that Huawei adopts for SDN and NFV. He also found the open sharing at the event valuable as it features different perspectives from Huawei experts, telecom operators, industry analysts as well as security experts.
LRTV Huawei Video Resource Center
Interview With David Snow, Principal Analyst, Current Analysis

10|31|14   |   2:24   |   (0) comments


David Snow talked about his understanding of Huawei and its SoftCOM strategy at the NFV Open Cloud Forum 2014, saying that Huawei's wide approach combining IT and CT expertise, introducing big data and analytics into solutions and contributing to the OpenStack community particularly resonate with him and make the company stand out in the industry.
LRTV Huawei Video Resource Center
Interview With Roz Roseboro, Senior Analyst, Heavy Reading

10|31|14   |   3:13   |   (0) comments


Roz Roseboro commented on Huawei's data center capabilities and NFV solutions at the NFV Open Cloud Forum 2014, saying that in addition to covering all three key domains of compute, storage and networking, the company also emphasizes the importance of management capabilities and professional services, which are essential in making NFV a reality.
LRTV Huawei Video Resource Center
Interview With Michael Howard, Co-founder & Principal Analyst, Infonetics Research

10|31|14   |   5:25   |   (0) comments


Michael Howard talked about SDN, NFV, and OpenStack adoption at Huawei's NFV Open Cloud Forum 2014. Particularly, he pointed out that Virtual Enterprise CPE is the top NFV use case that operators plan to invest in over 2014 and 2015 to deliver new enterprise services through virtualized functions.
LRTV Huawei Video Resource Center
Interview With Jerry Caron, Senior Vice President, Current Analysis

10|31|14   |   3:11   |   (0) comments


At Huawei's NFV Open Cloud Forum 2014, Jerry Caron from Current Analysis said that orchestration and management are key to realizing SDN and NFV for global carriers, and the approach that Huawei is taking, with its FusionSphere Cloud OS at the core, is in the right direction to address the challenges.
LRTV Documentaries
Broadband Battles

10|31|14   |   01:39   |   (0) comments


This year's Broadband World Forum featured a number of show floor battles focused on access gear, components and coffee.
Jonestown
Mobile Backhaul: Going to the Dark Side?

10|30|14   |   2:26   |   (1) comment


Heavy Reading's Patrick Donegan shares his view on a dark trend that bubbled up at Light Reading's annual backhaul conference in NYC.
LRTV Huawei Video Resource Center
2014 Huawei Electric Power Industry Summit: Interview With CEO of SwitchCom

10|30|14   |   4:13   |   (0) comments


SwitchCom, an IT company based in Angola, recommends a variety of Huawei solutions and hardware to their customers in the energy industry.
LRTV Huawei Video Resource Center
2014 Huawei Electric Power Industry Summit: Interview With Ethiopia's Ministry of Water Irrigation & Energy

10|30|14   |   4:08   |   (0) comments


Gosaye Mengistie of Ethiopia's Ministry of Water Irrigation & Energy discusses the collaboration with Huawei in that country.
LRTV Huawei Video Resource Center
2014 Huawei Electric Power Industry Summit: Interview with Dongfang Electronics Corporation

10|30|14   |   5:46   |   (0) comments


Dongfang Electronics Corporation, headquartered in Chengdu, China, is one of China's largest manufacturers of power generators and contractors of power station projects.
LRTV Huawei Video Resource Center
2014 Huawei Electric Power Industry Summit: Interview with Zimbabwe's Customers

10|30|14   |   3:31   |   (0) comments


Representatives of Zimbabwe's Ministry of Power and Development discuss the energy needs of their country as well as new areas of improvement due to enhanced ICT capabilities.
LRTV Huawei Video Resource Center
2014 Huawei Electric Power Industry Summit: Interview With Colbún Chile

10|30|14   |   4:29   |   (0) comments


In Chile, an aging energy infrastructure was in dire need of a modern update. Claudio Valenzuela of Colbún discusses how Huawei's ICT solutions continue to provide crucial information to improve the grid and how an in-country engineer is a cricial asset.
Upcoming Live Events
November 6, 2014, Santa Clara
November 11, 2014, Atlanta, GA
December 2, 2014, New York City
December 3, 2014, New York City
December 9-10, 2014, Reykjavik, Iceland
February 10, 2015, Atlanta, GA
May 6, 2015, McCormick Convention Center, Chicago, IL
May 30, 2015, The Westin Peachtree, Atlanta, GA
June 9-10, 2015, Chicago, IL
Infographics
WhoIsHostingThis.com presents six of the world's most extreme WiFi hotspots, enabling the most epic selfies you can imagine.
Hot Topics
Microsoft's Skype Embraces WebRTC on IE
Sarah Reedy, Senior Editor, 10/27/2014
FTC Slaps AT&T With Throttling Lawsuit
Sarah Reedy, Senior Editor, 10/28/2014
Wheeler Gets Down With OTT
Mari Silbey, Independent Technology Editor, 10/29/2014
China's MVNOs Hit the Wall
Robert Clark, 10/27/2014
Let's Not Kill SDN & NFV With Silos
Francois Locoh-Donou, Senior VP, Global Products Group, Ciena, 10/28/2014
Like Us on Facebook
Twitter Feed