M+E Connections

Starz continues to be open to new over-the-top (OTT) opportunities, CEO Chris Albrecht said June 9 at the Gabelli & Company Movie & Entertainment Conference in New York.

Starz currently offers an app for Android and iOS devices that allows consumers to stream and download its movies and TV shows. Its content is also offered via Amazon Prime as part of a “wholesale”-like pact in which Amazon basically serves as a “digital affiliate” of Starz, Albrecht said.

“I’m not sure how many more wholesale distributors we’ll have on the OTT side,” he said. “But the more people that can support our app and use it to bring awareness to their platform, as long as we think that they’re going to be good partners and reputable partners and are people that can help increase the awareness of our product, then I think we’re going to be pragmatic, but definite in trying to expand that number,” he said. Starz has held conversations with unspecified companies about such deals, he added, without naming any companies.

There is “opportunity in the MVPD” (multichannel video programming distributor) space through “skinny bundles or a refocus on selling video” or other OTT offerings, he told the conference. “You’ve got 104 million television homes. If you’re a fully distributed channel” like one of Viacom’s “there’s not a lot of new customers for them other than maybe the new emerging households” that include millennials, he said. “There are a lot of people that buy video that aren’t buying your product and the biggest reason that they’re not buying the product is probably price,” he said.

Starz previously had a streaming deal with Netflix that ended in early 2012. “The problem with the Netflix relationship was that for a “very low price” Netflix had access to all Starz and Encore subscribers and “there was no upside” to Starz, Albrecht said. The deal also “devalued the relationship” and the price that other partners were paying for the same content, he said. Netflix “offered us a ton of money” to renew the deal because “they really wanted those movies” from Starz, he said. But “I think it would have been a disastrous deal for us had we done it; it probably would have put us out of business,” he said.

Viacom CEO Philippe Dauman also touted the benefits of OTT at the conference. Sony’s PlayStation Vue has been “getting some traction now that they’ve re-priced” that skinny bundle, decreasing the prices of its three packages by $10 each, to $39.99, $44.99 and $54.99, he said. Viacom has been participating in that service and continues to look at other similar OTT offerings, he said. It will also work with new virtual MVPDs, he said, apparently referring to Hulu’s planned service.

The alternate TV content offerings are “getting to be more complex,” said Dauman. But Viacom will work with the new services just like it did with satellite companies and telcos in the past when they started competing with cable TV, he said.

Dauman predicted that “once you get through these transitional times,” it will be a “good, long-term opportunity,” adding: “This new world of providing consumer choice is a good way to expand the universe.” In the meantime, the “consolidation of the traditional MVPDs is showing signs of stabilizing” their subscriber bases, he said. “As you appeal to consumers, as you provide them the functionality they want,” other companies will enter the market through new products that “we will be participants in,” he said. “As these new products providing more choice develop it may be that SVOD will be a less important strategic source of revenue for us” in the future, he said.

Dauman also addressed the much-publicized dispute that’s been going on at Viacom between him and controlling shareholder Sumner Redstone about the planned sale of a 49% stake in Paramount Pictures. “It’s a lot more fun being involved in creating the content than being the content,” he said at the conference.

“Paramount’s had a tough year. It’s no secret,” he said. Viacom has “been working to ensure that Paramount going forward will have a vibrant pipeline reaching the target we’ve had for many years of 15 motion pictures a year,” he said. More than 40 players expressed interest in a stake in the studio and Viacom had detailed discussions with a more limited group of potential partners, he said, without naming any companies. The dispute with Redstone has “slowed down” the planned sale of the Paramount stake, so Viacom’s original goal of reaching an agreement by the end of this month is “going to slip somewhat,” he said.

Although the theatrical film business remains open to the “cyclical” nature of that business, there is “great value” in Paramount’s movie library and “there are going to continue to be more and more ways to exploit” the library, he said, adding new “technological distribution” methods “will open up a lot of new ways to monetize that library over time.”

At the conference, Starz’s Albrecht also addressed ongoing talk about a potential merger between his company and film studio Lionsgate. “There will be something that will happen” to spur consolidation in the industry, he predicted. But he said whether it’s with Viacom or Time Warner or “whether it’s with Starz or Lionsgate or AMC … once something happens, there are going to be more things that happen.” There will be sort of a “domino effect,” he predicted.