Amazon gets Epix video rights to challenge Netflix

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Netflix has entered into Internet video licensing contracts that could require the company to pay as much as $4.5 billion through June 2015, according to its latest quarterly report. The rising cost of online content has caused Netflix to carefully assess the financial pros and cons when the deals come up for renewal. Netflix lost the rights to video from the Starz channel earlier this year after concluding the content wasn’t worth the asking price.

Tuesday’s sell-off in Netflix’s stock also may have been driven by investors who had been betting the company will eventually be sold to Amazon. That prospect has been considered a long shot by most analysts, and the chances look even more remote now that Amazon has landed the Internet video rights to some of the most prized content in Netflix’s streaming library.

Selling the Epix rights to Amazon was a coup for the owners of the three-year-old TV channel, Viacom Inc.’s Paramount, Lions Gate Entertainment Corp. and privately held MGM Holdings Inc.

The companies didn’t say how much Amazon will pay for the Epix rights. Wible estimated the deal will be worth $100 million to $180 million per year.

Lions Gate’s shares rose 44 cents, or 3 percent, to close at $15.22, while Viacom Class B shares fell 65 cents to finish at $49.36. Amazon’s stock dipped 39 cents to close at $247.88.

Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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