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Starz renews deal to get Sony movies through 2021
Question of the Day
LOS ANGELES (AP) - Premium pay TV channel Starz said Monday that it has renewed its agreement to carry movies from Sony Pictures through films hitting theaters in 2021. The deal, which was seen as a must-win for the channel, comes two months after Netflix snatched future Disney movies from Starz.
The deal will extend Sony’s relationship with Starz by five years, giving the channel access to major Hollywood releases into the future. Disney movies released in 2016 and beyond will play on Netflix’s streaming service instead of Starz.
Starz CEO Chris Albrecht said in a securities filing, “we believe the terms are consistent with other recent agreements between traditional premium TV networks and major Hollywood studios,” without elaborating.
Netflix isn’t considered a “traditional” pay TV network, but its service, at $8 a month, is seen as increasingly competing with premium pay TV channels such as HBO, Showtime and Starz, which cost $15 a month.
Both Netflix and Showtime were bidders, according to a person familiar with the matter. Showtime only bid for films made by Screen Gems, the Sony label behind niche fare such as its “Resident Evil” franchise, according to a second person. Both people weren’t authorized to comment publicly and spoke on condition of anonymity.
A Netflix representative declined to comment.
Last month, Netflix Inc. CEO Reed Hastings told analysts on a conference call he was interested in going after Sony movies. “Our appetite is just like it was for Disney, it’s strong,” he said. However, he added that “there is no specific piece of content that we must have.”
Disney content was seen as more important for Netflix, which is raising the profile of its children’s programming and is popular with kids.
In comparison, Sony has put big-budget, popular movies in theaters including “The Amazing Spider Man,” “Zero Dark Thirty” and “Men in Black 3,” and has a stronger focus on movies rated PG-13.
“Had the deal gone to another pay TV network or subscription video on demand provider, it would have put Starz in a very difficult place strategically,” he said. Merwin added that it was “very unlikely” that Starz would renew a deal to put its content on Netflix, which expired last year.
He raised his target price on Starz shares to $16 from $15 but kept an “Equal weight” rating.
Janney analyst Tony Wible upgraded Starz to “Neutral” from “Sell” and bumped his estimate on the shares to $16 from $10.50. It remains to be seen how much Starz can offset the higher costs of the deal by raising prices on TV distributors, he noted.
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