Starz and Netflix parting ways


Starz Entertainment has confirmed widespread rumors that it has been unable to come to terms with Netflix on program streaming rights. Starz content will disappear from Netflix at the end of February.

“Starz Entertainment has ended contract renewal negotiations with Netflix. When the agreement expires on February 28, 2012, Starz will cease to distribute its content on the Netflix streaming platform.  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.  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,” Starz said in a statement.

The news sent Netflix shares skidding on Wall Street, since Starz is a major content provider for Netflix.

That was an overreaction, according to Barclays Capital analyst Anthony DiClemente. “We believe Netflix has a clear indication of what content is worth and the fact that it is willing to let Starz Play expire suggests to us the company is staying disciplined. Netflix now has six months to redeploy its Starz Play budget for incremental content and based on our discussions with studios, we do not believe that will be an issue,” the analyst told clients on Friday (9/2).

Netflix recently announced a series of deals with major TV/movie providers, as reported by RBR-TVBR:

Netflix renews, expands NBCU deal

CBS and Netflix go international

Telemundo licenses Netflix streaming in Latin America

Netflix orders up more Viacom shows

So, DiClemente doesn’t think losing Starz is such a big deal for Netflix. “We believe TV studios are more willing than ever to license content to Netflix and there is a lot of content still available-we point to recent deals with NBC U, 20th Century Fox, and CBS. And on competition, we question who could pay more for Starz’s content given Netflix’s 24.6M domestic users as of 2Q11. We believe this was more Starz protecting its premium brand, its distributors, and partners, than competing bids,” he wrote, the latter referring to investor fears that Starz will move its content to a Netflix competitor, such as

Starz LLC is a controlled subsidiary of Liberty Media Corporation. It is attributed to the Liberty Starz tracking stock group, which trades on Nasdaq as LSTZA.