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.