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Starz plans new digital strategy as Netflix deal ends

November 18, 2011|Ben Fritz

With 21.5 million Netflix streaming subscribers set to lose access to Starz's movies and television shows in February, the premium cable channel is planning a big digital push of its own in 2012.

Starz President Chris Albrecht said at an investor presentation in New York on Thursday that his network would launch an HBO Go-like application to allow subscribers to watch its content on a variety of digital devices. Also, for the first time, the executive indicated a willingness to offer Starz directly to customers and not as part of a package of cable television channels.

In September, Starz decided not to renew its agreement with Netflix.

Netflix offered Starz, which has about 19 million TV subscribers, more than $300 million per year to renew the digital distribution agreement, according to people familiar with the matter who were not authorized to discuss it publicly. But Starz wouldn't extend the contract unless it was placed on a premium tier that cost customers additional money, a provision Netflix rejected.

Albrecht called the decision to cut ties with Netflix "a big-boy choice" that will benefit his company in the long term. "We would have eroded ... our core business," Albrecht said at the investor conference for his channel's parent company, Liberty Media. "Within two to three years the Netflix deal would have been a drag on Starz's earnings."

For The Record
Los Angeles Times Sunday, November 20, 2011 Home Edition Main News Part A Page 4 News Desk 3 inches; 102 words Type of Material: Correction
Starz: An article in the Nov. 18 Business section about premium cable channel Starz's digital plans said that President Chris Albrecht was considering making Starz available to high-speed Internet customers who don't subscribe to other cable channels. In fact, Albrecht, at an investor conference, was discussing a scenario in which people might pay for numerous channels, including Starz, over the Internet instead of through traditional cable television, a spokeswoman said Friday. In addition, the article said that Liberty Media would fold Starz's stock into its own. Liberty Starz and Liberty Capital are being combined into a single company with a new stock.

Several TV providers including Comcast and Dish Network already allow subscribers to watch Starz content, which includes movies from Sony Pictures and Walt Disney Studios along with original programs such as "Spartacus" and "Boss," on their websites.

But Albrecht said Starz is building its own digital application that subscribers can watch on devices that probably will include smartphones and tablets.

In addition, Albrecht said Starz is having discussions for other distribution deals with several of Netflix's smaller competitors in subscription online video, including and Blockbuster.

He also said he would potentially offer Starz to people who don't pay for other cable television channels. One option would be to offer Starz as an added feature to people who pay for high-speed Internet. Such a move would represent a radical shift from the long-standing cable TV model, which requires consumers to subscribe to dozens of channels in "tiers" before they can access premium networks such as Starz, HBO and Showtime.

Also on Thursday, Liberty Media announced that it would combine Starz's separate tracking stock into its own.


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