Starz Settles with Comcast - Multichannel

Starz Settles with Comcast

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Comcast Corp. and Starz Encore Group LLC settled their litigation and came to
terms on a key carriage agreement for the Starz! and Encore services on Comcast
cable systems, they said Tuesday.

Comcast had sued the Liberty Media Corp.-owned programmer last year over
distribution terms Starz Encore had with AT&T Broadband. Comcast bought
AT&T Broadband in November 2002, becoming the country’s largest MSO, with
about 21 million subscribers currently.

Starz Encore in 2001 had sued AT&T Broadband to enforce the earlier
contract, which dated back to when Liberty was owned by Tele-Communications Inc.
AT&T Broadband -- which bought TCI -- objected to making certain payments
Starz deemed part of the contract.

Key terms in the current settlement worked in Comcast’s favor, analysts
said.

Comcast payments to Starz Encore will be made on a per-subscriber basis, and
not a flat fee, as was the case with the AT&T Broadband pact.

And Starz Encore won’t be able to pass through incremental programming costs,
as it could under the old TCI contract. In May 2001, Starz tried to pass along
$44 million in incremental costs to AT&T Broadband. AT&T Broadband
refused to pay, prompting Starz to sue.

Carriage terms in the current settlement apply to all Comcast systems that
carry the Starz Encore services.

In addition to offering the new-movie Starz! and older-movie Encore channels,
Comcast agreed to offer on-demand versions of those services and a
high-definition version of Starz!.

Comcast has been carrying rival Showtime Networks Inc.’s on-demand service
and recently added Home Box Office’ HBO On Demand. Starz said Comcast will offer
Starz On Demand in certain video-on-demand-enabled markets and in certain new
VOD markets as they launch.

Comcast will also add Starz Kids to its lineups.

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