Rumor: Starz turned down $300 million contract renewal from Netflix

The news that the pay cable TV network Starz had decided to pull out of contract renewal talks with Netflix was a big shock on Thursday. Today a new report from the Los Angeles Times claims, via unnamed sources, that Starz allegedly turned down a offer from Netflix that was worth over $300 million to extend the contract between the two groups. As a result of Starz's decision, movies and TV shows from the cable channel will no longer be made available on Netflix after February 28, 2012.

The $300 million number is about 10 times what Netflix paid Starz to stream its content back in October 2008. However, Starz allegedly turned down this new offer because it also wanted Netflix to charge customers more than its current $7.99 a month fee to access Starz's movies and TV shows. Netflix was apparently unwilling to make this move.

Meanwhile, Netflix is attempting to do some damage control following Starz's Thursday announcement. In a statement sent to the Hollywood Reporter, Netflix said that while securing the content from Starz three years ago was an important part of Netflix's overall growth, it added that since that deal was made it has also secured content contracts with a number of other movie studios. It claimed, "Because we’ve licensed so much other great content, Starz content is now down to about 8 percent of domestic Netflix subscribers’ viewing." It also claimed that by the first quarter of 2012, the last quarter for the current Starz-Netflix contract, "we expect Starz content to naturally drift down to 5 percent-6 percent of domestic viewing ... " Netflix said that it will now take the money it would have used for the Starz contract renewal to pay for new agreements with other content providers.

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It's all about a business model of making more money the next year than the last. Investing in the stock market only makes sense when you have returns that grow and let's face it; pay TV pays dividends and companies like Starz know it. Cutting the cord is the last thing they want and providers like DISH Network deliver more value for people that want it all. Since DISH bought Blockbuster it only makes sense they would enhance the value of their satellite service with an offering like Blockbuster. The Blockbuster Movie Pass will be a great addition to my employee service that I can't wait to take advantage of. I bet there are even people scrambling to get it free for 12 months starting Oct. 1st because no one else has an offer like that out there now. I use the DVD by mail feature now but I have a separate account I can cancel now that I'll have it on my DISH bill which is more convenient. The 4,000 streaming titles come in handy too which will be a great new option for me. My kids like the game rentals and that there are over 4,000 to choose from since they master them so quickly. (Only because they play like 4 hours a day.)

Looks like I'm going back to my old ways of watching movies. Too bad these companies can't embrace how entertainment should be served today. Netflix is ahead of its time. Too bad these dinosaurs that run movie studios and premium cable can't see that. Hopefully they die out soon for some new blood to embrace what people want (before it's too late).

How about they use that 300 million to lower their rates back to what they were so we could still get dvds and streaming?

I try and watch stuff legally, I really do. I actually just went to see Fright Night in theaters.

but when you hear **** like this, and the out right greed you see that these people show.

they force me to download tv shows and movies. I have both hulu plus (waste of money, you would think that when you pay for a steaming service you would have no ads) and netflix. I still gotta download tv shows and movies cause they are on the streaming.

its sad that there are people out there that wanna watch some of the awesome movies that are made and some of the really good tv shows produced (which are few and far between) and you cant cause some guy wants a second story pool in his summer home and he has to have it next week NOT in a month.

Netflix is a victim of its own success.

Starz is only going to end up getting hurt by their move--$300,000,000 is roughly equal to 20,000,000 subscribers.

I've got no choice but to cancel streaming on netflix and just keep starz on sat tv... even though its just a little more in price the movie selection is better and is in HD. If I need anything else then its off to torrents at least then I can download HD content.

if you want to watch programming from HBO, Showtime, Starz, etc. then go out and actually susbcribe to HBO, Showtime, Starz, etc

timster said,
if you want to watch programming from HBO, Showtime, Starz, etc. then go out and actually susbcribe to HBO, Showtime, Starz, etc

Which will cost you alot more than netflix charges you since you would have to subscribe to each programming station. If im not mistaken around 15$ a piece?

grkmaster said,

Which will cost you alot more than netflix charges you since you would have to subscribe to each programming station. If im not mistaken around 15$ a piece?

Agreed. Which means most consumers will subscribe to one at most, or perhaps none. Then Starz loses out on $300 million dollars. I get one premium network with my cable subscription and it's not Starz. This announcement isn't going to change that either. So basically, until now Starz was making money off me as a Netflix subscriber. Netflix offered to increase that 10x and Starz said no. Meaning Starz will now get $0 from me. I'm not sure if that's a smart move for Starz.

SkolVikings said,

Agreed. Which means most consumers will subscribe to one at most, or perhaps none. Then Starz loses out on $300 million dollars. I get one premium network with my cable subscription and it's not Starz. This announcement isn't going to change that either. So basically, until now Starz was making money off me as a Netflix subscriber. Netflix offered to increase that 10x and Starz said no. Meaning Starz will now get $0 from me. I'm not sure if that's a smart move for Starz.


not to mention what is on netflix is always older so it is not like netflix was taking away subscribers. it was free money and advertising. if people liked what they watched on netflix they would spent the money to get a subscription to the channels. they are losing two streams of revenue in one by doing this.

SkolVikings said,

Agreed. Which means most consumers will subscribe to one at most, or perhaps none. Then Starz loses out on $300 million dollars. I get one premium network with my cable subscription and it's not Starz. This announcement isn't going to change that either. So basically, until now Starz was making money off me as a Netflix subscriber. Netflix offered to increase that 10x and Starz said no. Meaning Starz will now get $0 from me. I'm not sure if that's a smart move for Starz.


not to mention what is on netflix is always older so it is not like netflix was taking away subscribers. it was free money and advertising. if people liked what they watched on netflix they would spent the money to get a subscription to the channels. they are losing two streams of revenue in one by doing this.

ILikeTobacco said,

not to mention what is on netflix is always older so it is not like netflix was taking away subscribers. it was free money and advertising. if people liked what they watched on netflix they would spent the money to get a subscription to the channels. they are losing two streams of revenue in one by doing this.

The studios continually shoot themselves in the head when it comes to modern consumers of media.

timster said,
if you want to watch programming from HBO, Showtime, Starz, etc. then go out and actually susbcribe to HBO, Showtime, Starz, etc
I do not have cable TV, and it's not because I am cheap--it's because the cable companies arbitrarily increase the rates on a frequent basis for absolutely no valid reason.

The reason I went with Netflix was that it was an affordable solution that got me pretty good movie and TV coverage, and I do not mind going through classics.

So, according to you, the right solution is to go back to a broken, corrupt system that gouges me on a regular basis just because these studios believe their content is somehow worth more today than it was two to three years ago? Clearly, this is worth a lot of money as I am willing to pay for it and so are other people. However, I am not going to cancel Netflix /and/ get cable to watch Starz, or any of the others either.

I will simply watch less TV. Starz can eat their lost revenue. For every company that pulls these shenanigans, I hope they fail. It's time that the entertainment industry realized that they are overvalued. I do not pirate any movies, TV shows, music or software, but every day I feel less likely to care about people that do. Specifically, as a software developer, it's hard to justify software piracy to me--I cannot expect to be paid for software, yet turn around and steal it from someone else, and I extrapolate that to the rest of the of the group, but they are clearly gouging and practically stealing from us at this point by maintaining their overvalued, magically increasing in value and blocking others from legitimately trying to get into the system. The cartel needs to die. And soon, before they write laws that forever keep them in further existence.

grkmaster said,

Which will cost you alot more than netflix charges you since you would have to subscribe to each programming station. If im not mistaken around 15$ a piece?

That is probably why they asked them to up the subscription price. They probably saw a drop in cable subscriptions as a result of the cheaper Netflix price. What would you pay? $15 or $8? Cable companies where probably riding Starz as well about it.

Ok, now this going to happen... after a while there will be a report that starz content is the most pirated after Feb 28th and then starz is going to complain... This is just like the news company that asked Google to take their content of the search and their page hit drastically went down and backfired at them.

eventually, all these studios will have their own services.... kinda like the studios have their own networks now (HBO, Stars, Cinemax..... etc) just to gouge you at their own rate

These studios are really starting to get greedy (even more so than they already were). Demanding over 10x what they did just 3 years ago? Are they ****ing insane? People here love to bitch about Netflix not having a wide selection of content. Well people, these are the jackasses you need to bitch at, not Netflix.

roadwarrior said,
These studios are really starting to get greedy (even more so than they already were). Demanding over 10x what they did just 3 years ago? Are they ****ing insane? People here love to bitch about Netflix not having a wide selection of content. Well people, these are the jackasses you need to bitch at, not Netflix.

I seriously agree. It kills the ability to grow and become the one in all source for all movies that it could become. Starz already saw the backlash that Netflix got for changing the pricing structure and yet they want them to charge more ? People would have another uproar about it. Im sure i wouldnt be happy with it and would prolly cancel. I wouldnt want to but its hard to having to pay for so much with so little already available

roadwarrior said,
These studios are really starting to get greedy (even more so than they already were). Demanding over 10x what they did just 3 years ago? Are they ****ing insane? People here love to bitch about Netflix not having a wide selection of content. Well people, these are the jackasses you need to bitch at, not Netflix.

Netflix should do what Jobs did to Adobe and call them out on their actions. Even though I didn't really agree with some things he said, I'm going to miss the actions of Jobs as Apple CEO.

Trueblue711 said,

Netflix should do what Jobs did to Adobe and call them out on their actions. Even though I didn't really agree with some things he said, I'm going to miss the actions of Jobs as Apple CEO.
I definitely agree with this. I'd love to see Netflix, or even Apple stick it to the studios (movies and music).

Show them for what they are: money stealing leeches out to take everything they can, and then even more during the next billing cycle.

Especially in a down economy. This is the best time to drive people away from cable, and the never-ending bill increase for the exact same content. Come on Netflix, I am still a paying customer because I know it is the growing costs to gain new content that are messing you up! Kick them while you are down!

roadwarrior said,
These studios are really starting to get greedy (even more so than they already were). Demanding over 10x what they did just 3 years ago? Are they ****ing insane? People here love to bitch about Netflix not having a wide selection of content. Well people, these are the jackasses you need to bitch at, not Netflix.

Studios such as Starz produce their OWN original content and have pay to actors, directors, filming crew and everyone/everything associated with producing movies and TV series while Netflix only streams the content.

Why should they have to lower their demands so their content can be a on a third party services when they have a TV channel and online Web Streaming service of their own. IF you like shows from HBO, Stars and etc. then support them rather then Netflix.