Starz CEO: Sony Pay 1 Output Deal Wasn’t Working for Us

Starz CEO Jeffrey Hirsch said losing Sony movies to Netflix and Disney was a strategic win for his company as “the value wasn’t there” for Starz.

Netflix and Disney earlier this year made separate sequential Pay 1 output deals for Sony Pictures’ 2022 movie slate, wresting the content from Starz.

The 2017-21 Pay 1 deal between Starz and Sony was projected to generate about $1.3 billion in license fees for Sony — up about $330 million from the previous $739 million pact from 2014 to 2021. Over time, Starz apparently questioned the value of the content it was paying big money for.

Jeffrey Hirsch

Speaking May 12 on the virtual MoffettNathanon 8th Annual Media and Communications Summit, Starz CEO Jeffrey Hirsch said that other than three box office hits — Spider-Man: Far From Home, Jumanji: The Next Level and Venom — the bulk of the studio’s theatrical slate failed to resonate with moviegoers. Hirsch said box office data has always been a big deal in the Pay 1 window — and what he saw from Sony wasn’t compelling.

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“About 50% of the movies coming from Sony that we were paying for made under $10 million at the box office,” Hirsch said. “And if you look at the Top 10 movies over the last 12 months [prior to the pandemic], if you take [those movies out], none of those movies we got [from Sony] were in the Top 10.”

Hirsch said that based on the Starz consumer, on a title-by-title basis, management didn’t think the value was there to extend the agreement. By comparison, the executive said that while the 15 movies Starz is getting from corporate parent Lionsgate, i.e. John Wicks, Borderland, Knives Out, etc., is less than the Sony agreement, the titles’ impact on Starz subscribers is greater.

“We, early on, went negotiating a pay-1 output deal [with Lionsgate] ahead of Sony,” Hirsch said. “We really looked at the data, and other than those three movies, we were paying for stuff that wasn’t really resonating with our consumer. For us the value wasn’t there.”

Indeed, Starz, which is owned by Lionsgate, ended 2020 with 28 million subscribers, which included 14.6 million streaming subs and 13.4 million linear subs — the latter down from 19.9 million at the end of 2019. The streaming sub service, which includes a $8.99 tier in the United States, and $5 internationally, grew almost 70% from 8.6 million in 2019.

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