DoJ Sizing Up Comcast's Starz-Epix Swapout – Report

Comcast's decision to add Epix and remove Starz from certain pay-TV packages reportedly has grabbed the attention of the US Department of Justice.

In a move that, if it went ahead, would shine more light on the growing tension between pay-TV distributors and programmers as direct-to-consumer streaming services become more prevalent, the DoJ is looking to probe Comcast's decision to move Starz into a more expensive à la carte position while bundling another premium programmer, Epix, into select pay-TV packages, the New York Post reported, citing unnamed sources.

Starz has launched a campaign urging Comcast customers to seek a refund as the operator prepares to remove the premium programmer from select pay-TV packages.
Starz has launched a campaign urging Comcast customers to seek a refund as the operator prepares to remove the premium programmer from select pay-TV packages.

The paper said the DoJ is considering an investigation over concerns that Comcast's decision is anti-competitive. The DoJ "wants to know if Comcast is abusing its market power," and could act "soon" on Comcast's dealings with Starz, a person familiar with the department's thinking told the Post.

News of a possible DoJ-led inquiry would come soon after Comcast announced it would replace 17 Starz channels in its Xfinity TV package with channels from Epix, a premium programmer owned by Metro-Goldwyn-Mayer.

Getting ejected from Comcast's packages could be costly for Starz. The Post said Starz's packaged programming represents as much as a third of its 26.5 million subs and about $250 million in annual revenues.

Earlier this month, Comcast announced an expansion that would bundle Epix with "select" Xfinity TV premium packages starting December 10. It would also make way for ScreenPix, a new curated mix of "library" channels from Epix covering genres such as Action and Westerns that will debut on December 12.

Meanwhile, Lionsgate-owned Starz issued a warning that its channels, which carry originals series such as Power and Outlander, would be replaced on December 10 in those Comcast packages, forcing subscribers to pay an additional $12 per month to receive Starz from the cable operator.

Agitation over pricing, streaming options
The tension stems primarily from disagreements over what Comcast believes it should pay for Starz as the premium programmer complements its pay-TV distributor relationships with standalone, direct-to-consumer streaming services alongside new distribution agreements with OTT-based video aggregation platforms.

Starz launched its DTC streaming offering in April 2016, and sells it today for $8.99 per month. Starz also sells its service at that price via The Roku Channel and Amazon Prime and, more recently, moved to do the same through the relatively new Apple TV Channels aggregation service. Fellow premium programmers HBO and Showtime also have developed direct-to-consumer streaming options and tie-ins with various OTT platform partners. Epix launched a standalone streaming option in January that costs $5.99 per month.

Comcast downplayed the possible threat of a DoJ inquiry.

"Program carriage issues have never provided a basis for plausible antitrust concerns," a Comcast official said in an emailed statement. "Today, with the current state of the market where programmers have so many options, it is hard to see any viable antitrust claim against a distributor. Starz itself has taken advantage of streaming options through Roku and Amazon Prime, and also distributes its programming directly through a Starz subscription service."

Last week, Comcast told the Post that Starz's direct-to-consumer offering and tie-ins with other OTT platforms water down the value of Starz.

Starz, meanwhile, said it has been "working diligently to reach a fair market distribution agreement with Comcast." In the meantime, it has urged its viewers to apply pressure on Comcast about the decision.

Tied into that effort, Starz has erected a website that directs consumers to call Comcast to complain and to "[d]emand a refund for the channels you are still paying for but no longer receiving!"

Power executive producer 50 Cent (Curtis Jackson) also got into the act with a tirade on Twitter and other social media outlets complaining about Comcast's decision.

More packaging static
The Comcast-Starz dust-up is one example of a recent packaging change made as pay-TV providers rethink their economics.

Comcast is also getting some static over its decision to move Turner Classic Movies to its $9.95 per month "Sports Entertainment" package.

Comcast reasoned that it arrived at that decision after a regular review of programming and changes that attempt to extract the most value of that programming.

"Viewership of TCM is low, as over 90% of our customers watch less than two movies per month," Comcast said in an explanation posted online. "Given this, we decided to move TCM to the Sports Entertainment Package, which will help us manage programming costs that are passed on to our customers while continuing to make the channel available to those who want to watch it."

Related posts:

— Jeff Baumgartner, Senior Editor, Light Reading

Be the first to post a comment regarding this story.
Sign In