Starz Plans 90-Day Window For Some Content On Netflix

Starz, the premium cable network owned by Liberty Media Corp. (LCAPA, LINTA, LSTZA), plans to start delaying some of the video content it makes available on Netflix Inc.'s (NFLX) online streaming service--a shift that comes after Netflix caused a stir in the TV industry with its first acquisition of original programming.

Starz, which supplies Netflix with some of the most current video content available for streaming, will start delaying the release of its original programming on the service until 90 days after it premieres on the channel, beginning with the April 1 launch of "Camelot," Starz's upcoming drama about the tales of King Arthur.

Some time after that, Starz plans to apply the same 90-day delay to first-run movies that the channel airs through its distribution deals with film studios owned by the likes of Walt Disney Co. (DIS) and Sony Corp. (SNE).

The plan comes as Starz is approaching a high-profile negotiation with Netflix over renewing its distribution deal with the online video distributor. Liberty Chief Executive Greg Maffei has acknowledged that the deal has not been well-received by Starz's traditional pay-TV distributors, like cable and satellite companies, who view it as a pact that undermines the economics of their video subscription business.

He has said Starz will approach its renewal negotiations with Netflix with an attempt to balance the interests of its major distribution partners with Starz's own interests in growing new revenue streams from digital distribution channels.

Other media executives on the content side have also derided the Starz-Netflix deal as one that dilutes the value of content, with News Corp. (NWS, NWSA) Chief Operating Officer Chase Carey calling it the "ultimate example of product being sold beyond cheap."

Some expect Netflix to pay Starz much higher rates in renewal to hold on to content that is crucial for its streaming service. Others say Starz will seek a much more restrictive deal or walk away completely.

A Starz spokeswoman declined to comment on the reasons for the channel's shift towards Netflix, but Netflix's recent announcement that it acquired exclusive, first-run rights to a new show created by David Fincher called "House of Cards," starring Kevin Spacey, bolstered perceptions that the company has ambitions to compete with premium cable networks like Starz, Time Warner Inc.'s (TWX) HBO and CBS Corp.'s (CBS) Showtime.

Netflix spokesman Steve Swasey said the company's distribution contract with Starz requires that movies airing on the channel be made available on Netflix without delay, adding that Starz won't be able to follow through on that plan without negotiating a new contract with Netflix.

As for Starz's original programming, Swasey noted that video content from Epix LLC--a movie network formed in a joint-venture between Viacom Inc. (VIA), Lions Gate Entertainment Corp. (LGF) and Metro-Goldwyn-Meyer Inc.--has a 90-day delay, and he said that hasn't detracted from the appeal of the offering.

"At Netflix, we value completeness more than freshness," Swasey said. "We'll have the complete lineup of Starz original programming available 90 days after it premieres, and if people want to see it before then, they should talk to their cable operator."

For its part, Showtime recently decided to ratchet back its own distribution relationship with Netflix's streaming service when its current agreement with the company expires this summer. It wants to remove from Netflix all episodes of TV series that are currently running on the channel, like "Dexter" and "Californication."

HBO doesn't make any of its content available on Netflix's streaming service, and Time Warner Chief Executive Jeff Bewkes has been another critic of deals like the one between Starz and Netflix.

-By Nat Worden, Dow Jones Newswires; 212-416-2472; nat.worden@dowjones.com

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