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.

 

Disney+ Running Starz Banner Ad in Exchange for Streaming Rights to its Own Movies

Disney CEO Bob Iger says he has no regrets licensing pay-TV rights to original movies for big dollars to Netflix and Starz.

Then came Disney+ and the rush to over-the-top video distribution.

Disney’s massive push to bridge the SVOD divide with Netflix (and Amazon Prime Video) through a branded SVOD service stocked with original movies and TV shows ran into legal challenges since many Disney movies were earmarked for competing distribution channels through pre-existing license agreements.

Thus, getting the company’s singular corporate initiative in 2019 to launch on time reportedly required some creative legal maneuvers behind the scenes.

Disney+ and ESPN+ will run banner ads for the Lionsgate owned Starz pay-TV and standalone SVOD service in exchange for exclusive streaming rights to Star Wars: The Force Awakens, among other titles.

Harrison Ford in ‘Star Wars: The Force Awakens’

The $6.99 Disney+ service had been touted as ad-free. And indeed, there will be no Starz advertising within Disney+ and ESPN+ platforms.

First reported by The Verge and confirmed by Disney, the banner ad will limited to the log-in page and is part of a revised license agreement enabling Disney+ to have access to original movies previously slated for Starz.

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“I think as you can see from what we’re making available, and from seeing some of the titles that we’re making available at launch, there’s been a lot of effort that went into bringing it all back together so that we could make it available on the service,” Michael Paull, head of Disney streaming services, told The Verge in August.

“It’s clear that, from a library perspective, while there’s certainly a lot of volume, the recent studio slate will not fully be available at any one time because of the existing deals and it would take time for those rights, ultimately, to revert back to us,” Iger said last summer.

Agnus Chu, head of content at Disney+, contends license agreements can sometimes be split up “100 different ways.”

“Where it’s been licensed to, who it’s licensed to, and for how long, that gets very complicated,” he said.

Sling TV Expands Free Access to Roku, Amazon Devices

Could Dish Network’s Sling TV be transitioning into an ad-supported online television platform?

Launched in 2015 as the first standalone online Tv service offering access to ESPN and other pay-TV channels outside of the traditional bundled cable package, the $25 monthly platform is expanding its “free experience” to Roku and Amazon devices, including Fire TV.

After downloading the app, users can watch select Sling TV programming for free without entering their credit card information. Once in guest mode, users can browse and watch content from the “My TV” screen.

Users also have the option to create a Sling account and sign up for service, purchase pay-per-view movies (Android and Roku only) and subscribe to standalone channels like Showtime and Starz, among others.

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Sling ended the most recent fiscal period with more than 2.3 million subscribers — a sub count that hasn’t grown much in recent quarters.

With Apple and Disney bowing branded subscription streaming platforms next month, coupled with the rise in ad-supported VOD services such as Tubi and Pluto TV, pushing marketing outside the box is the new normal.

Free shows on Sling include “Live PD: Police Patrol,” “Hell’s Kitchen,” “3rd Rock from the Sun,” and movies The Illusionist or Bad Lieutenant: Port of Call New Orleans.

Users without a subscription can also access Showtime or Lionsgate-owned Starz for a separate fee. Users can also purchase access to channels, including Curiosity Stream, Up Faith & Family and Hallmark Movies Now, among others.

“As the only live streaming service that allows you to purchase à la carte channels without subscribing to a base service, Sling makes it easy to stream all of your favorite content in the same interface,” the service wrote in a blog post.

 

Report: Lionsgate Considering Spinning Off Starz

Lionsgate is reportedly considering spinning off or selling its Starz subsidiary.

Lionsgate, which acquired Starz in 2016 for $4 billion, is looking to leverage the pay-TV and $8.99 monthly over-the-top video subsidiary in an era of burgeoning streaming video, according to The Wall Street Journal, which cited sources familiar with the situation.

Specifically, the Santa Monica, Calif.-based studio/distributor is following the corporate playbook Viacom pursued in 2004 when it spun off its controlling stake in Blockbuster Video for a $1.3 billion impairment charge.

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Lionsgate reported about $2.9 billion in debt at the end of the most-recent fiscal period. The company could offload the debt through a special-purpose acquisition vehicle — a public company created to acquire a specific asset.

Earlier this year, CBS reportedly offered $5 billion for Starz, which Lionsgate considered too low. Two years ago, Hasbro looked to acquire Starz but negotiations ended without a deal.

Lionsgate also has other reasons to consider offloading Starz. With pay-TV operators looking to rework carriage agreements with content holders, DirecTV reduced the amount it pays Lionsgate to carry Starz and Starz Encore.

Now Comcast is reportedly looking to drop Starz when its carriage deal expires at the end of the year. Loss of the nation’s No. 1 cable operator could result in Starz losing millions of subscribers, or more than $225 million in annual revenue.

 

Lionsgate Ups Jeffrey Hirsch to CEO of Starz

Lionsgate Sept. 26 promoted Jeffrey Hirsch to CEO and president of Starz, replacing former CEO Chris Albrecht, who left the premium pay-TV/SVOD service in February

As CEO, Hirsch will shape the overall business and programming strategy for Starz and oversee the continued evolution and expansion of the brand’s over-the-top video platform around the world.

Hirsch joined Starz four years ago, was promoted to COO in 2016 and has been running the network for nearly a year.

Under his leadership, Starz increased its overall domestic subscriber base from 23.5 million to 24.7 million last year and continued the rapid growth of of the brand’s domestic OTT businesses.

Starz has more than 4.4 million domestic OTT subscribers with successful launches during the last year on Apple, Hulu, Roku, YouTube TV and an array of other platforms.

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Lionsgate operates separate SVOD service Starz Play internationally.

Hirsch shepherded the launch of the Starz app in the U.S. and orchestrated Starz Play’s expansion into nearly 50 countries in Europe, Latin America, the Middle East and North Africa as well as Canada.

Starz plans to continue its rapid international growth and, as previously announced, expects to have as many as 15 million to 20 million international subs by 2025.

“Jeff continues to lead Starz’s transformation into one of the world’s premier subscription platforms,” Lionsgate CEO Jon Feltheimer said in a statement. “He has a clear strategic vision, great understanding of where our business is headed and strong relationships that will all contribute to Starz’s continued strong growth and evolution.”

Hirsch recently announced that STARZ delivers the highest composition of female viewership in premium cable, and the network continues to build on its success with a focused strategy of developing and producing premium programming that appeals to women and other traditionally under-served African-American, Latinx and LGBTQ audiences.

Starz original programs “Power” has more than 10 million multi-platform views per episode and “Outlander,” a perennial ratings favorite among women.

Hirsch recently greenlit three new series written and/or executive produced by women, including a reimagined “Dangerous Liaisons,” the third season of “The Girlfriend Experience” and the dark comedy “Shining Vale.”

The network is also preparing the launch of “Power Book II: Ghost,” starring Mary J. Blige in a lead role, the first of several “Power”-inspired series that include a prequel shepherded by “Power” creator and showrunner Courtney A. Kempand executive producer Curtis “50 Cent” Jackson as Starz continues to expand the “Power” Universe into a year-round viewing experience.

Hirsch joined the company in 2015 as president of global marketing and product development. Since Lionsgate’s acquisition of Starz in 2016, Hirsch has played a lead role in integrating Starz into the Lionsgate family and exploring opportunities for the two companies’ combined suite of OTT offerings.

Prior to joining Starz, Hirsch served as EVP and chief marketing officer, residential services at the former Time Warner Cable.

 

 

Report: Comcast Plans to Drop Starz Platforms

In what could be a major blow for Lionsgate and its Starz business unit, Comcast has reportedly told the service that it plans to drop the multilevel video distributor at the end of the year.

Should Comcast sever ties with Starz and Starz Encore, the loss of subscribers to Starz would be significant — about 33% of the service’s domestic members.

More importantly, with Starz accounting for about 70% of Lionsgate’s profit, the sub loss could undermine Lionsgate fiscal fortunes, according to The Information, which broke the news citing sources familiar with the situation.

A Lionsgate representative was not immediately available for comment.

Indeed, news of the potential split sent Lionsgate shares freefalling before rebounding to close Aug. 30 down about 5%.

The stock rebound was in part due to Starz separately inking a carriage agreement with AT&T, including AT&T Now, DirecTV and U-verse.

While the scuttlebutt could be nothing more than Comcast attempting to negotiate a better fee agreement in the media, the nation’s No. 1 cable operator is reportedly interested in MGM Holdings — owned Epix filling the void.

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The moves come as Comcast navigates a rapidly changing home entertainment world with consumers increasingly switching to loss-leading subscription video-on-demand and online TV platforms instead of the traditional cable bundle.

With premium pay-tv services such as HBO, Showtime and Starz bowing standalone services, pay-tv operators such as Comcast, Dish Network and others are reconsidering their distribution agreements with the channels.

Regardless, the situation comes at a delicate time for Lionsgate, which is increasingly relying on Starz to buttress an uneven studio business and television production bottom line.

Earlier this year, Lionsgate reportedly rebuffed a $5 billion offer for Starz from CBS — the latter looking to acquire subscriber growth for its CBS All Access and Showtime OTT ventures.

Lionsgate has licensed Starz to Apple’s pending Apple TV+ launch, in addition to marketing the service via Amazon Prime Channels and expanding globally into 48 countries through Starz Play.

Meanwhile, MGM has been looking for a fiscal partner for Epix to help expand the platform’s reach internationally — a goal Comcast and its Sky subsidiary could help fulfill.

AT&T, Starz Ink New Carriage Agreement, Including OTT Video

AT&T and Starz, a Lionsgate company, Aug. 30 announced a new multiyear content carriage agreement. The deal secures rights for AT&T to offer the full suite of Starz and Starz Encore premium linear and HD channels, on-demand, HD on-demand to subscribers of DirecTV, AT&T TV (formerly DirecTV Now) and U-verse video platforms.

“Our customers want more choice and value in addition to compelling entertainment in our channel offerings,” Daniel York, chief content officer, AT&T Communications, said in a statement.

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“Starz is pleased to have found a mutually beneficial way to extend our relationship over the next several years to give millions of AT&T subscribers access to our acclaimed premium original content and vast library of blockbuster films,” said Jeffrey Hirsch, Chief Operating Officer of Starz. “By working together, both companies are in a position to continue to deliver great value to our shared customers.”

Starz Adds 400,000 Q1 Members, Tops 4.4 Million Subs

Starz added 400,000 domestic streaming video subscribers in the first quarter, ended June 30, to finish the period with 4.4 million members since launching in 2012.

It was the $9 monthly Lionsgate-owned OTT video unit’s best-performing quarter in terms of sub growth.

Total Starz sub growth, including pay-TV channels and StarzPlay internationally, increased by 2.6 million to 26.5 million, which includes 24.4 million domestic subs.

As a result of the sub growth, Lionsgate’s Media Networks division increased revenue 4.9% to $372.4 million.

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Segment profit for Starz Networks increased 3.4% to $103.7 million, which was offset by ongoing content investment in StarzPlay.

Indeed, overall Media Networks profit declined to $60.6 million from $88.5 million in the previous-year period due to content costs.

On the fiscal call, Starz COO Jeffrey Hirsch defended the SVOD service’s subscription price as Disney readies less expensive $6.99 Disney+ service on Nov. 12.

“If you look at the history of Starz, we’ve always been a premium, add-on television,” Hirsch said.

Lionsgate’s global expansion of Starz has resulted in the development of an additional 20 episodic programming projects, according to Kevin Beggs, chairman of the media company’s TV group.

Beggs dismissed Netflix’s headline-grabbing mega production deal with “Game of Thrones” creators David Benioff and Dan Weiss, contending Lionsgate doesn’t chase those kinds of deals.

“For writers and directors who are overperforming, there’s always been an unbelievable upside the way we structure our deals,” Beggs said, alluding to Lionsgate’s practice affording content creators with multiple compensation options, including backend unavailable at Netflix’s business model.

TV Time: Amazon’s ‘Carnival Row’ Most Anticipated New Show, Netflix’s ‘Mindhunter’ Most Anticipated Returning Show in August

Amazon Prime’s “Carnival Row” is the most anticipated new show and Netflix’s “Mindhunter” is the most anticipated returning show coming in August, according to TV Time’s “Anticipation Report” chart.

TV Time is a free TV viewership tracking app that tracks consumers’ viewing habits worldwide and is visited by more than 1 million consumers every day, according to the company. TV Time’s “Anticipation Report” is based on data from those users.

“Carnival Row,” a fantasy series about mythical creatures starring Orlando Bloom and Cara Delevingne, debuts Aug. 30. “The Dark Crystal: Age of Resistance,” a series prequel to the Jim Henson film The Dark Crystal, also debuting Aug. 30, is the No. 2 anticipated new series.

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Among returning shows, the second installment of “Mindhunter,” Netflix’s crime thriller series, debuts Aug. 16. TV Time users also anticipate three other Netflix returning series at No. 2, No. 3 and No. 4, respectively: “Cable Girls,” hitting Aug. 9; “Dear White People,” debuting Aug. 2; and “GLOW,” coming Aug. 9. Starz’s drug kingpin drama “Power,” the sixth and final season of which hits Aug. 25, took the No. 5 spot among returning series.

Most Anticipated New Shows for August:

  1. “Carnival Row” (Amazon Prime) — Aug. 30
  2. “The Dark Crystal: Age of Resistance” (Netflix) — Aug. 30
  3. “Infinity Train” (Cartoon Network) — Aug. 5
  4. “Why Women Kill” (CBS) — Aug. 15
  5. “BH90210” (Fox) — Aug. 7

 

Most Anticipated Returning Shows for August:

  1. “Mindhunter” (Netflix) — Aug. 16
  2. “Cable Girls” (Netflix) — Aug. 9
  3. “Dear White People” (Netflix) — Aug. 2
  4. “GLOW” (Netflix) — Aug. 9
  5. “Power” (Starz) — Aug. 25