Netflix, Starz on the Outs
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.)
Read more about Netflix.
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- Starz Joins Netflix Constellation