Lionsgate Eyeing Consumer-Direct Movie Option While Pledging Loyalty to Theatrical

With studios increasing distribution of select titles direct to consumers in the home while theaters remain largely shuttered worldwide, Lionsgate has dabbled in the PVOD window, releasing I Still Believe to consumers just weeks after its March 12 theatrical debut.

On a May 21 fiscal call, Joe Drake, chairman of the Lionsgate Motion Picture Group, was asked if the studio would consider distributing titles directly rather than through third-party platforms such as iTunes, Google Play, Vudu and Amazon, among others.

Drake, who said Lionsgate remains bullish on the theatrical business model, said the D2C concept, like a lot of the distribution status-quo during the COVID-19 pandemic, is being analyzed and tweaked, while remaining in solidarity with the theatrical window.

“One of the things [Lionsgate] prides itself on is being flexible and agile,” Drake said. “We still believe theatrical is a big driver of our business, and will continue to play aggressively in that space.”

Lionsgate’s first theatrical release is slated for Aug. 21 with horror film Antebellum.

At the same time, the executive said that when the studio sees an opportunity for distributing a movie direct to the consumer, it won’t hesitate. Drake didn’t directly answer whether that would include bypassing existing transactional VOD platforms in favor of Starz or another proprietary platform.

Lionsgate currently releases about 30 movies a year through digital channels, a strategy Drake said the studio would expand, but not at the expense of exhibition partners.

“I don’t think any company has done a better job exploiting niches and opportunities with audiences, and we’ll continue to do that,” he said.

Separately, Lionsgate said it is actively working with credit card companies such as American Express to include free Starz OTT service as part of a promotion. The studio/distributor currently has a Redbox promotion by which new Starz subscribers get nine free one-day kiosk disc rentals at a $5 monthly fee for 90 days.

“We think some of [those] consumer bases [with Redbox] overlap. We think there’s a great partnership there. We’ll continue to talk to almost anybody,” said Kevin Beggs, chairman of Lionsgate Television Group.

Lionsgate expects to generate upwards of 15 million combined Starz OTT, StarzPlay, Spanish-language Pantaya and StarzArabia subscribers by the end of the fiscal year. It ended the quarter with 10 million.

Sling TV Offering Free Month of Epix, Showtime and Starz

After losing 110,000 subscribers in the previous 12 months, Dish Network’s Sling TV is launching “Premium Pass,” which gives new and existing subs 30 days free access to MGM-owned Epix, ViacomCBS’s Showtime and Lionsgate-owned Starz programming.

Launched in 2015, Sling Blue and Orange ($30 each) program tiers feature 50+ channels — including A&E, AMC, Bravo, CNN, E!, Fox News, FX, HGTV, HLN, MSNBC, and TLC, among others. The Premium Pass offer is now included across all Sling TV services: Sling Blue ($30/mo.), Sling Orange ($30/mo.) or Sling Blue + Sling Orange ($45/mo.).

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Premium programming includes “Monday Rom-Coms”: My Best Friend’s Wedding and Something’s Gotta Give (Showtime). “Wednesday Westerns”: The Kidand True Grit (Epix). “Friday Families”: Night at the Museum and Night at the Museum: Battle of the Smithsonian (Starz).

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AT&T Giving Subs Free Access to Premium Content

AT&T March 26 became the latest media company offering limited free access to proprietary and third-party content during the coronavirus pandemic.

The telecom is offering DirecTV, U-Verse, AT&T TV and AT&T TV Now subscribers free access to HBO, Starz, Cinemax and Epix into April. Starz and Epix are owned by Lionsgate and MGM, respectively.

Starz will be available from March 26 to April 4, Epix from April 4 to April 16, and HBO and Cinemax available from April 17 to 20.

CBS All Access earlier announced it would give a free 30-day trial to new subscribers.

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The strategy comes as AT&T readies the May launch of HBO Max — the $14.99 SVOD platform it hopes to carry initially on the backs of existing pay-TV subscribers. For the telecom, unfortunately, those subs have been leaving in droves.

AT&T lost 1.2 million streaming video and pay-TV subs in the most-recent fiscal period. It lost 2.9 million subs in the previous three fiscal quarters combined.

And with 3.3 million people filing for unemployment benefits this week — the highest tally since 1982 — due to the drastic economic downturn caused by the coronavirus pandemic, pay-TV might become an unnecessary luxury to millions more.

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Discovery, StarzPlay Partner for SVOD Distribution

Discovery and StarzPlay March 16 announced a partnership that will see the former’s Dplay streaming video service available across the Middle East and Asia (MENA) on StarzPlay, Starz’s international SVOD based in Dubai with more than 1 million subscribers.

The agreement affords StarzPlay subs access to thousands of hours of content, segregated into playlists dedicated to specially curated interest verticals — including crime, lifestyle, food, wildlife and more. New content will be added to the platform each month.

Discovery TV franchises include “Shark Week,” “MythBusters,” “Gold Rush,” “Expedition Unknown,” “House Hunters International” and “Say Yes to the Dress,” among others.

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“This is the first time Discovery is taking its content beyond the pay-TV universe in the region and opening it up to a whole new customer base,” Amanda Turnbull, GM, Discovery Middle East & Africa, said in a statement. “As we commence our pivot toward digital, this milestone sets the benchmark for Discovery’s continued growth in the digital space.”

Following a free trial period of up to one-month (varies across the region), monthly subscription to the content costs AED/SAR15 ($4) per month as an add-on package.

“With this partnership we are starting a new chapter in company’s growth to become the one-stop shop for premium content,” said Danny Bates, chief commercial officer of StarzPlay.”

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Dplay will be available in Q2 2020, through existing StarzPlay apps, including Apple TV. StarzPlay is available to download online and via respective iOS and Android app stores.

 

Lionsgate Ups Q3 Motion Picture Segment Profit; Streaming Video Costs

Liongate’s motion picture group, which includes home entertainment, Feb. 6 reported third-quarter (ended Dec. 31, 2019) operating income of $49 million, which was up 12.5% from operating income of $43.5 million in the previous-year period.

Revenue increased 30% to $474 million from $362.6 million during the previous-year period. The studio attributed much of the gain to the box office success Knives Out, which is expected to top $300 million at the worldwide box office, as well as the continued outsized ancillary home entertainment performance of John Wick: Chapter 3 — Parabellum.

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Knives Out, which features an ensemble cast, has generated more than $294 million at the global box office since launching Nov. 27, 2019.

Separately, Keanu Reeves actioner, John Wick: Chapter 3 — Parabellum, finished 2019 as the ninth best-selling DVD/Blu-ray Disc release according to VideoScan tracking data.

“Our Motion Picture Group turned in a strong performance in the quarter,” CEO Jon Feltheimer said in a statement.

At the same time, Lionsgate continues to push over-the-top video distribution — specifically Starz and StarzPlay internationally. The streaming services ended the period with more than 8.6 million subscribers. The company has projected StarzPlay international subscriber growth from 15 million to 25 million over the next five years.

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The legacy pay-TV businesses Starz, StarzPlay Arabia and Pantaya reached 28.5 million subs in the quarter. The overall global total reflected an increase of 2.1 million subscribers, up 8% year-over-year. Total domestic Starz subs declined 1.2 million year-over-year to 24.1 million.

Rollout of StarzPlay International and Starz OTT continue to balloon costs and negatively impact the bottom line. StarzPlay posted a segment operating loss of nearly $40 million, while streaming services lost $9.8 million. Both units lost a combined $5.8 million in the previous-year period.

Comcast, Starz Ink New Carriage, Content Distribution Deal

Christmas came early for Starz, the Lionsgate-owned pay-TV and over-the-top video distributor.

Comcast Cable and Starz Dec. 23 announced they have entered into a long-term agreement for the continued carriage of the Starz networks on Xfinity TV as well as a new content deal between Lionsgate and NBCUniversal.

Financial terms of the agreement were not disclosed.

“We are pleased that we were able to extend the partnership to Peacock and other businesses within Comcast while also ensuring Xfinity customers continue to enjoy great Starz programming,” Dana Strong, president of consumer services for Comcast Cable, said in a statement.

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The companies announced that NBCUniversal will license content from Lionsgate for Peacock, its streaming service launching in April 2020. Peacock will have access to hundreds of feature films and shows from the Lionsgate catalog to stream alongside the previously announced slate of original series, TV shows, and films from Universal and other major studios.

NBCUniversal will also license content to Starz to be featured in the U.S. and on its international streaming service, StarzPlay, now available in 49 countries worldwide.

The new pact represents a lifeline of sorts for Starz as Comcast remains one of the premium channel’s largest domestic distributors. Comcast had previously said it would replace Starz with MGM’s Epix platform is no agreement was in place by Dec. 31.

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Under the new agreement, the Starz flagship premium channel, as well as the Starz Encore suite of channels — including Encore, Encore Westerns, Encore Black, and Encore Action — and related video on demand content will continue to be available to Xfinity customers with expanded distribution on the Comcast Flex platform and a path for an orderly transition to an à la carte business.

“We look forward to continuing our longstanding partnership with Comcast to deliver great content and great value to our customers,” said Starz CEO Jeffrey Hirsch. “Our ongoing relationship with Comcast reflects our ability to unlock opportunities across all of our businesses to the benefit of our subscribers.”

StarzPlay Inks Content Deal With Image Nation Abu Dhabi

StarzPlay, the international subscription streaming video service owned by Lionsgate, has inked an original production deal with Image Nation Abu Dhabi. StarzPlay is separate than Starz OTT, the domestic $8.99 SVOD service.

StarzPlay/Image Nation anthology co-production of Urban Legends, with each episode telling a different story. The series will explore regional tales and fables from the Middle East that seek to resonate with StarzPlay’S Arabic speaking audience. Production will commence in 2020 with the Arabic-language content set to be released towards the end of the same year.

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The announcement follows Image Nation’s recent focus on episodic content, having released documentary series History of the Emirates. The series launched on local and international channels around the UAE’s 48th Annual National Day and is currently airing in 50 countries around the world on National Geographic.

“This is a real milestone in StarzPlay’s development as we enter into a new realm, producing our own original Arabic content for the first time,” Maaz Sheikh, co-founder/CEO at StarzPlay, said in a statement. “We hope this is the beginning of a long and productive journey with Image Nation as we enter into the original content space, initially with a focus on Arabic language.”

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StarzPlay is available in 20 countries across the Middle East, North Africa and Pakistan, with more than 10,000 hours of content including premium movies, exclusive and Arabic series.

Starz Rolls Out International Play App

Starz Nov. 25 announced it has launched its international StarzPlay app in Brazil, France, Germany, Mexico and the United Kingdom, with plans to launch in 20 additional countries in 2020.

Lionsgate-owned Starz has more than 5.6 million domestic over-the-top video subscribers. StarzPlay is a separate SVOD service outside the United States.

“Expanding our direct-to-consumer product into the global arena … gives subscribers seamless entry to our platform and premium content on their device of choice, while also providing us with access to key consumer data insights as we continue to position ourselves for success in the evolving content ecosystem,” CEO Jeffrey Hirsch said in a statement.

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StarzPlay ($5) is currently available in Europe and Latin America on Apple TV; in France, Germany, Mexico and the U.K. on Amazon Prime Video channels; Mexico on izzi and Totalplay; in Spain on Orange and Vodafone; in the U.K. on Virgin Media; in France on Orange; and as Starz in Canada in alliance with Bell Media.

Subscribers in select countries have access to hundreds of movies and series, including Starz Originals such as the recently debuted “The Spanish Princess” and “Dublin Murders,” as well as curated series including “The Act” and drama “Mr. Mercedes” and movies like Hitch, Ferris Bueller’s Day Off and No Country for Old Men.

Starz Adds Record 1.2 Million OTT Subs

Lionsgate-owned Starz saw its domestic OTT service add a record 1.2 million subscribers in the second quarter (ended Sept. 30), to end the period with 5.6 million subs, its best sequential growth quarter ever. The service is targeting 6 million subs by the end of the fiscal year.

Starz ended the quarter with 27 million total global pay-tv subscribers, up 1.8 million from the prior year quarter, and 24.7 million total domestic subs — down about 400,000 subs from the prior-year quarter.

The pay-TV tally is under threat from ongoing carriage issues with Comcast Cable, which accounts for about a third of Starz’ subs. Comcast has threatened to replace Starz with Epix unless it can negotiate more favorable terms.

Regardless, CEO Jon Feltheimer said Starz Play (available outside the U.S. only) remains on target to reach 4 million international subscribers in fiscal 2020 — due in part to now being operational in five countries.

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“Even as our industry is undergoing the most disruptive secular change in its history, all of our core businesses have staked out strong, sustainable and unique positions within the ecosystem and are performing very well,” Feltheimer said in a statement.

The media networks segment revenue was relatively flat from the prior year quarter at $374 million, while segment profit declined 14.8% to $104.6 million driven by investment in the expansion of subscription streaming serviced Starz Play International. The service added about 200,000 subs in the quarter.

Motion picture segment revenue increased 7.1% to $405.8 million and segment profit increased nearly 300% to $51 million from the prior-year quarter reflecting the strong theatrical performances of Scary Stories to Tell in the Dark, Angel Has Fallen and Rambo: Last Blood, as well as the continued outsized ancillary performance of John Wick: Chapter 3 — Parabellum.

Television production segment revenue of $274 million was up 80.1% from the prior-year quarter, while segment profit increased 34% to $12.6 million due to an increase in revenue from television episodes delivered.

DOJ Drawn Into Comcast, Starz Carriage Dispute

With legacy pay-TV under siege from cord-cutting subscribers and high-profile alternatives such as Netflix, Amazon Prime Video, Hulu and now Apple TV+, the status quo for traditional carriage agreements has gone out the window.

And so it was that Comcast last month quietly announced it would soon end Xfinity subscriber access to Starz, the premium movie and TV service it acquired in 2016 for $4.4 billion.

The news was significant since Comcast represents about a third of Starz’ 24.4 million subscribers. Starz, which operates its own branded $8.99 monthly subscription streaming service, has been a profit vehicle for Santa Monica, Calif.-based Lionsgate.

Comcast reported it will replace Starz on Dec. 10  with Epix, the premium service owned by MGM and formerly Lionsgate, unless a new agreement can be reached. The news has contributed to a 9% drop in Lionsgate’s stock valuation — which is already down nearly 50% in the fiscal year.

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The negotiation impasse has reportedly caught the attention of the Department of Justice, which continues to have Comcast in its crosshairs ever since its acquisition of NBC Universal in 2009. Back then, regulators forced the cable giant to relinquish management input on its stake in Hulu, citing antitrust issues.

Earlier this year Comcast sold its Hulu stake to Disney after acquiring Sky satellite TV operator in the United Kingdom.

Comcast’s NBC Universal unit is readying its own SVOD service, Peacock, early next year.

The situation prompted Senators Dianne Feinstein (D-CA) and Susan Collins (R-ME) to contact Assistant Attorney General Makan Delrahim to investigate the situation. Delrahim played a significant role in the DOJ’s failed attempt to stop AT&T’s acquisition of Time Warner.

“These changes could lessen competition in the video programming market and limit choices for many thousands of consumers in Maine and millions more across the nation,” Collins wrote in a letter to Delrahim as reported by CNBC.

“I encourage both of you to seek a win-win solution and consider all options to keep Starz programming on the air,” Feinstein wrote in a separate letter.

Comcast is employing strategy out of Dish Networks’ playbook, which typically includes threats to halt access to third-party content distribution for more favorable distribution terms. Indeed, Dish currently has HBO blacked out to it subscribers.

Comcast, like Dish, contends its subs can access services such as Starz and HBO independently, thus negating what it considers to be excessive carriage fees.

“At the end of the day, this is a routine commercial negotiation that raises no conceivable antitrust concerns,” Comcast said in a statement.

Starz countered that Comcast is forcing its subs to pay more for its service.

“By unilaterally taking Starz out of its packages with no refund … Comcast is unfairly depriving them of relatable programming that reflects their cultural experience,” read a Starz statement.

Lionsgate reports third-quarter (ended Sept. 30) financial results Nov. 7.