Albrecht: Starz Working on New Netflix Deal

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With about a year left on its controversial Netflix distribution agreement, Starz Entertainment CEO Chris Albrecht said that the premium channel is in continued talks with the online distributor and is seeking a deal that will bring pricing parity to both online and more traditional forms of distribution.
Starz upset some cable, satellite and telco distributors when it struck the Netflix deal in 2008, mainly because it bundles access to about 2,500 Starz movie titles into the monthly unlimited Netflix subscription (priced at $8) at no additional charge. Cable, satellite and telco distributors can charge as much as $14.95 a month for a Starz multiplex.
And though the current deal is not set to expire until the first quarter of 2012, Albrecht told analysts Monday during a conference call to discuss fourth quarter financial results that Starz is in constant discussions with the online giant.
"We realize that the original Netflix deal was controversial," Albrecht said. "We have an opportunity to look at that deal going forward in these next months and we maintain that what we need to work on is product price parity for the different Starz, Encore and MoviePlex product."
Liberty Media CEO Greg Maffei said that Starz management has done a commendable job in improving the tone of the Netflix arrangement, but added that more work needs to be done.
"It's in our interest to be a good partner," Maffei said. "Most of our product is on consignment and we need our cable partners, our satellite partners and our telco partners to drive the business and make both of us money. Does this mean that all the friction is gone? No. But it's something we are trying to manage and be thoughtful about."
Despite the Netflix controversy, Starz Entertainment had a sharp rise in customers during the quarter. The Starz channels finished the period with 18.2 million subscribers, up 800,000 from the third quarter, its biggest quarterly gain since 2007. Its Encore channels finished the period with 32.8 million customers, up from 32 million in the third quarter.
Albrecht said that the growth wasn't due to any single factor, but a combination of a strong originals lineup, and efforts by its own and its distributors' sales teams.
"This growth demonstrates what we've been talking about - there is for Starz a real opportunity in the existing premium television universe," Albrecht said.
On the originals front, Spartacus: Gods of the Arena was viewed by an average of 3.3 million viewers per episode, making it the most watched premium channel series in the winter. Albrecht said that Starz will continue to invest in original series, with a goal to airing 50-60 hours of new original content annually.