Light Reading

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        ADD A COMMENT
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 Sabre
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 Sabre
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 Sabre
12/5/2012 | 4:54:48 PM
re: Netflix, Starz on the Outs


That may have been Rene's brother, Ivan.

From The Founder
Light Reading sits down at CES with the head of Cisco's service provider video business, Conrad Clemson, to discuss how NFV and cloud security relate to video, the challenge of managing 4K/8K traffic, the global expansion of Netflix and virtual reality.
Flash Poll
Live Streaming Video
CLOUD / MANAGED SERVICES: Prepping Ethernet for the Cloud
Moderator: Ray LeMaistre Panelists: Jeremy Bye, Leonard Sheahan
LRTV Custom TV
Hosting in Ireland, Past & Present

2|10|16   |   16:07   |   (0) comments


Garry Connolly, president of Host in Ireland, presents the keynote at Light Reading's 2020 Vision Executive Summit in Dublin.
Women in Comms Introduction Videos
What's Hot in Mobile Commerce?

2|10|16   |   12:18   |   (1) comment


Claire Maslen, financial services relationship manager at the GSMA, talks about the development of the digital commerce sector and the types of relationships that mobile operators are developing to further their m-commerce strategies.
LRTV Documentaries
EANTC Tests Nokia IP Routing & Mobile Gateway VNFs for Real World Deployment

2|9|16   |   5:08   |   (1) comment


Nokia obtained validation of its virtualized router and virtualized mobile gateway capabilities through rigorous testing performed by EANTC. The results set a new industry benchmark for outstanding performance, scalability, resiliency and manageability. Nokia VNFs are ready for telco cloud deployment, so that service providers can accelerate mobile, business and ...
Between the CEOs
CEO Chat With Level 3's Jack Waters

2|8|16   |   26:15   |   (1) comment


Light Reading CEO and founder Steve Saunders sits down with Level 3 Communications' CTO Jack Waters to discuss hot topics like virtualization, 4K and the future of telecom...
LRTV Custom TV
The Composable Telco

2|8|16   |   24:46   |   (0) comments


Heavy Reading's Principal Analyst Caroline Chappell presents the keynote at Light Reading's 2020 Vision Executive Summit in Dublin.
LRTV Custom TV
Join Us at the Digital Operations Transformation Summit

2|4|16   |   03:52   |   (0) comments


The Digital Operations Transformation Summit on February 21, 2016 at the Crowne Plaza Barcelona Fira Centre will bring together 50 senior executives to engage in a unique debate on the opportunities and challenges presented by the transformative evolving digital landscape. RSVP now at events@lightreading.com.
LRTV Custom TV
Making the Test: ADVA Ensemble Connector vs. Open vSwitch

2|4|16   |   01:28   |   (0) comments


Light Reading, in partnership with EANTC, recently tested ADVA's Ensemble Connector, which replaces open vSwitch and offers carrier-grade capability and interoperability. The test results strengthen ADVA's credibility as a provider in the virtualization space.
LRTV Custom TV
Bridging the Gap Between PoCs & Deployment in NFV

2|4|16   |   31:50   |   (0) comments


Charlie Ashton of Wind River presents the keynote at Light Reading's 2020 Vision executive summit in Dublin.
Between the CEOs
CEO Chat With Mike Aquino

2|3|16   |   17:34   |   (0) comments


The former CEO of Overture Networks, Mike Aquino, discusses why truly open virtualization solutions provide service providers with the greatest choice.
Shades of Ray
MWC: Buckle Up for 5G & the IIoT

2|2|16   |   02:28   |   (0) comments


This year's Mobile World Congress looks set to be a 5G land grab and a chance to get down and dirty with the Industrial Internet of Things (IIoT) – but what will the 5G discussions actually be about?
LRTV Custom TV
Case Study: Building China's Next-Gen TV Networks

2|2|16   |   5:01   |   (0) comments


With over 2 billion viewers worldwide, Shenzhen Media Group is one of China's largest content producers. By partnering with Huawei and Sobey, SZMG was able to modernize media operations with the Converged News Center, a production studio that is a model for next-generation workflows.
LRTV Custom TV
Quad Channel Modulator Driver with 46 Gbaud Capability from MACOM

1|28|16   |     |   (0) comments


MACOM's MAOM-003427 is the industry's first surface-mount modulator driver with 46 Gbaud capability to support next generation 200G and 400G applications.
Upcoming Live Events
March 10, 2016, The Cable Center, Denver, CO
April 5, 2016, The Ritz Carlton, Charlotte, NC
May 23, 2016, Austin, TX
May 24-25, 2016, Austin Convention Center, Austin, TX
All Upcoming Live Events
Hot Topics
Google's 5G Radio Ambitions Are Expanding
Dan Jones, Mobile Editor, 2/5/2016
Cincinnati Bell Joins Weight Watchers Club
Alan Breznick, Cable/Video Practice Leader, 2/5/2016
Yahoo & Verizon Sitting in a Tree...
Brian Santo, Senior editor, Test & Measurement / Components, Light Reading, 2/8/2016
Vodafone: Flexible Work Policies Boost Profits
Sarah Thomas, Editorial Operations Director, 2/8/2016
It's Time to Integrate OTT Video
Alan Breznick, Cable/Video Practice Leader, 2/8/2016
Like Us on Facebook
Twitter Feed
Webinar Archive
BETWEEN THE CEOs - Executive Interviews
Light Reading CEO and founder Steve Saunders sits down with Level 3 Communications' CTO Jack Waters to discuss hot topics like virtualization, 4K and the future of telecom...
The former CEO of Overture Networks, Mike Aquino, discusses why truly open virtualization solutions provide service providers with the greatest choice.
Animals with Phones
Retro Is the Way to Be Click Here
Some animals are too cute for smartphones.
Live Digital Audio

Broadband speeds are ramping up across Europe as the continent, at its own pace, follows North America towards a gigabit society. But there are many steps to take on the road to gigabit broadband availability and a number of technology options that can meet the various requirements of Europe’s high-speed fixed broadband network operators. During this radio show we will look at some of the catalysts for broadband network investments and examine the menu of technology options on offer, including vectoring and G.fast for copper plant evolution and the various deployment possibilities for FTTH/B.