Starz dumps Netflix… maybe
Starz just put out a statement saying that it “has ended contract renewal negotiations” with Netflix and will stop distributing its content — TV shows and movies — on the service at the end of February, 2012. Netflix shares are down 9% after-hours as a result.
“This decision is a result of our strategy to protect the premium nature of our brand by preserving the appropriate pricing and packaging of our exclusive and highly valuable content. With our current studio rights and growing original programming presence, the network is in an excellent position to evaluate new opportunities and expand its overall business.”
One way to read this is that Starz just wants to publicly shame Netflix into paying it more money and giving it more brand exposure because it couldn’t convince it privately. Maybe Netflix and Starz will restart their renewal negotiations and everything will work out fine.
Another possibility is that Starz really does want to go out on its own, or find a different partner. There are plenty of options out there, such as Amazon, YouTube, Hulu, or even others.
Update: Netflix CEO Reed Hastings tells Business Insider that it’s no big deal:
Because we’ve licensed so much other great content, Starz content is now down to about 8% of domestic Netflix subscribers’ viewing. As we add a huge more content in Q4, we expect Starz content to naturally drift down to 5-6% of domestic viewing in Q1. We are confident we can take the money we had earmarked for Starz renewal next year, and spend it with other content providers to maintain or even improve the Netflix experience.
Interesting that he doesn’t even try to string along the idea that they might still be negotiating. Perhaps it really is over.