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Liberty Media in No Hurry to Re-up Netflix/Starz Deal

6 Jan, 2011 By: Erik Gruenwedel

Liberty Media CEO Greg Maffei said his executives are in no hurry to finalize a new licensing deal between its subsidiary Starz Entertainment and Netflix.

“There is no need to re-cut the deal, and there is plenty of time to extend and create a new deal — or not and do something else,” Maffei Jan. 5 told an investor group in Phoenix, Ariz. “I'm not sure why it's in our interest to go prematurely cut a deal.”

Renewal of a license deal between Netflix and Starz has been the talk of analysts and media observers as Netflix’s star and market penetration in streaming has grown exponentially — much of it on the back of a $30 million-per-year content license deal with Starz that expires in October.

A new agreement, which would afford Netflix access to Disney and Sony Pictures movies and related studio fare, is expected to fetch Starz as much as $300 million annually.

Netflix co-founder and CEO Reed Hastings has been equally coy, going so far last month at a separate investor event to say a new deal was not paramount to the online DVD rental pioneer’s future.

“We can live without it if we have to,” Hastings said. “It is not essential to our success.”

Analyst Richard Greenfield with BTIG Research in New York disagrees, saying a new deal is key to Netflix continued subscriber growth of a streaming-only business.

“Starz represents the single-largest piece of the movie segment and is critical for Netflix to maintain, especially if it wants to keep shifting its subscribers away from its DVD business,” Greenfield wrote.

Indeed, Greenfield went so far as to suggest that absent a new deal, Netflix should pursue acquisition of Starz.

A further twist developed earlier this week when Liberty announced that The Weinstein Co. had acquired a 25% stake in Starz, a deal that afforded the company's Anchor Bay Entertainment unit access to the independent studio's new releases on DVD and Blu-ray, including Golden Globe nominee The King's Speech.

Vivendi Entertainment currently distributes Weinstein's catalog of more than 100 titles on disc after its previous distributor, Genius Products, experienced financial problems.


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