Starz CEO Hints at 8 Million OTT Subs as Service Expands into France, Italy, Spain

In deference to the burgeoning over-the-top video ecosystem, Lionsgate CEO Jon Feltheimer spent much of the Aug. 9 fiscal call plugging subsidiary Starz and its branded $8.99 SVOD platform.

Feltheimer said Starz, which Lionsgate acquired in 2016 for $4.4 billion, is “well-capitalized” to take advantage of the growing online TV market (i.e. DirecTV Now, YouTube TV, Sling TV). The channel is slated to bow on Hulu Live TV in October.

“We’re bullish about overall [including pay-TV] subscriber growth for the rest of the year,” said Feltheimer.

On the call, Starz CEO Chris Albrecht suggested the OTT platform’s sub base could rival the 8 million associated with HBO Now – with the majority of Starz sub growth in the United Kingdom and Germany generated through Amazon Channels and, separately, as a result of a Hulu partnership in the United States.

“If you took our Amazon business and added in a potentially-like Hulu business, we’d be right up there [in subscribers],” Albrecht said. “We have a strong wholesale relationship … great price point, and we think it’s a really good product.”

Starz officially disclosed 2 million OTT subscribers in late 2017.

Starz (branded Starz Play outside the U.S.) features Lionsgate catalog movie and TV programming as well original series “Power,” “Outlander,” “American Gods” and “The Spanish Princess,” among others.

Starz co-owns Starz Play Arabia — the largest OTT video service in the Middle East, with Starz Play launches planned for France, Italy and Spain.

Responding to an analyst’s question about Lionsgate’s willingness to up Starz content spending, Feltheimer said the answer is “yes”.

“The plan is working as we spend more, as we market more effectively, we are getting excellent subscriber [growth] trajectories,” he said.

 

Starz Bowing on YouTube TV, Hulu

Seeking to significantly upgrade the Starz brand globally, corporate parent Lionsgate has licensed the premium channel’s app to YouTube TV and Hulu.

Speaking on the May 24 fiscal call, Jon Feltheimer, CEO of Lionsgate, said the distribution agreements were part of a global rollout of the Starz app across 15 territories over the next three years.

As previously reported, Lionsgate launched the Starz Play channel in the United Kingdom and Germany via Amazon Channels, the ecommerce behemoth’s platform affording Prime members access to third-party over-the-top video services.

The app offers more than 1,000 hours of original programming, including Lionsgate created series “The Royals,” “Casual” and “Boss,” as well as feature films ranging from the “Saw” and “Hunger Games” franchises.

“All of this activity comes on top of [the] Starz launch in Canada and the continued growth of our Starz Play venture in the Middle East and North Africa,” Feltheimer said. “In Canada, where we recently announced our partnership with Bell Media, Starz programming is already available to consumers with full over-the-top and linear rollout slated for early next year.”

Starz availability on YouTube TV, Google’s standalone online TV service, begins next month, followed by similar launch on Hulu Live with TV in October.

“We expect meaningful subscriber increases from all of these new deals,” Feltheimer said.

Indeed, Starz pay-TV base declined by 500,000 subscribers, finishing the quarter with 23.5 million subs.

More importantly, a decline in licensed Starz programming to third parties resulted in an 8% drop in Media Networks segment operating income to $115 million compared to the previous-year period. Revenue dipped 1% to $366 million.

For Chris Albrecht, president of Starz, OTT video is the brand’s future.

“The OTT business is clearly the business that we see there being real growth potential in and the economics are good for us there, and we’re very bullish as we expand our global reach,” he said.

The news helped up Lionsgate shares nearly 5% May 25 in early trading.