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Starz CEO: Movies Becoming a Commodity on Pay-TV

7 Jan, 2014 By: Erik Gruenwedel

Starz CEO Chris Albrecht

Catalog and even first-run theatricals are largely filler for premiere episodic originals, chief executive Chris Albrecht tells investor group

Starz operates 17 premium content channels via eponymous and Encore brands delivering about 1,000 movies a month to about 55 million subscribers monthly. But to CEO Chris Albrecht, movies are merely an appetizer to scripted original programming he would like to see top 50 hours in 2014.

On Jan. 25, Starz bows pirate-themed “Black Sails,” from Transformers director Michael Bay. Filmed in South Africa (miles away from any ocean) at a cost Albrecht said was half what “Game of Thrones" costs HBO. He said consumer response to the pilot at Comic-Con was so good, a second season began filming last November.

Albrecht said Starz is taking the “Sails” to the Television Critics Association Press Tour Jan. 9-11 in Los Angeles. He said the new series, along with upcoming shows “Outlander” and “Power,” and second seasons of “The White Queen” and “Da Vinci’s Demons,” among others, underscores the company’s growing focus on original programming.

“Movies are more and more becoming a commodity, even first-run theatricals in the premium space,” Albrecht told attendees at the Citi Internet, Media & Telecommunications confab in Las Vegas. “They provide great bulk. They provide a lot choice for the viewers. What they don’t provide is great marketing opportunities. And that’s what originals do.”

The CEO said originals help differentiate Starz from other pay-TV services and help carry the brand into new subscriber homes, technologies and outside the U.S. Albrecht said that brand then helps subsidiary Anchor Bay Home Entertainment, among others, distribute the programming and third-party content (notably The Weinstein Co.) into the home entertainment market.

“We try to give [multichannel program distributors] more reasons to sell us,” he said. “We want them to make money [on our programming].”

Indeed, Albrecht said the costs of distributing Starz directly to consumers via an over-the-top video service such as Netflix are pretty significant. Instead, the executive said talks continue with MVPDs (and virtual MVPDs) to offer Starz on lower-cost bundled packages similar to what Comcast is trying with its SVOD service and HBO.

“We see an opportunity in the already existing [MVPD] universe,” he said, adding that Starz continues to do some “fence mending” with content holders regarding fallout from its previous (ended in 2012) SVOD agreement with Netflix.

“Starz had a very inequitable deal with Netflix for a few years, that arguably Netflix gained a whole more from than Starz did,” Albrecht said. “It stuck a finger in the eye of distributors.”

As a result, Albrecht said Starz would tread lightly with any involvement in OTT video; looking to partner — not compete — with MVPDs in the process.

“We would like to take advantage of what we see clearly as growth opportunities — with them,” he said.

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