Starz to Embargo Content 90 Days to Netflix24 Mar, 2011 By: Erik Gruenwedel
On the heels of Showtime pulling 'Dexter,' 'Californication'
Starz Entertainment beginning April 1 will reportedly delay by 90 days access of original programming and new release movies by Netflix.
Starz, which is owned by Liberty Media Group, will begin delaying select content with its original King Arthur drama “Camelot,” according to Dow Jones. The altered arrangement would also include future first-run movies from Disney and Sony, which are contractually distributed by Starz.
The move comes just days after Showtime Networks said it would pull popular series “Dexter” and “Californication” from Netflix.
Starz has been a major source of studio catalog movies for Netflix’s burgeoning streaming service. At $30 million a year, the license deal, which expires in October, has rankled rival media executives who believe the Los Gatos, Calif.-based online disc rental pioneer is accessing third-party content below market value.
With the proliferation of pay-TV channels and desire by media companies to drive incremental revenue from emerging digital platforms, Netflix’s $7.99 streaming-only service is seen as a significant challenge.
Indeed, News Corp. president and COO Chase Carey in a recent analyst call characterized Netflix’s deal with Starz as the “ultimate example of product being sold beyond cheap.”
Netflix spokesperson Steve Swasey told Dow Jones that its contract with Starz mandates movies airing on the channel be made available the next day on Netflix. He said Starz wouldn’t be able to implement changes without renegotiating the contract.
Michael Pachter, analyst with Wedbush Morgan Securities in Los Angeles, said the delay is similar to what Epix ironed out in its recent license agreement with Netflix.
“It makes a lot of sense that Starz would emulate [Epix],” Pachter said. “None of the premium services want Netflix to steal their customers, so they have to create a window where they have the content first.”