Starz Wins Offer To Extend Rights Deal with Sony

BY: AMY STEIN

Starz, a premium cable channel, has extended their deal with Sony Pictures to keep theatrical movies on their channel through 2021. Starz was able to outbid Netflix. Two months earlier, Netflix had beat out Starz winning the movie rights to Disney and ever since Netflix has been very vocal about obtaining the rights to Sony, as well.[1. Joe Flint, Starz strikes deal to hold on to Sony Pictures, http://www.latimes.com/entertainment/envelope/cotown/la-et-ct-sony-starz-20130211,0,3326278.story (Feb. 11, 2013).]  With Disney shifting to Netflix with it’s first-run rights, Starz needed to grow it’s library and Sony Pictures was their only major studio to supply them with films, “so renewal of the deal was crucial for the channel.”[2. Ben Fritz and John Jannarone, Starz Holds On to Rights for Sony Movies, http://online.wsj.com/article/SB10001424127887324880504578298052581170998.html (Feb. 11, 2013).]  This new contract has removed the “limit on the number of people to whom Starz can stream Sony movies over the internet.”[3. Id.]

While the details of the bidding between Starz and Netflix was kept under wraps, it has been estimated that the price for Sony’s rights were somewhere between $300 and $400 million per year. According to Starz CEO, this deal is consistent with other terms between premium networks and major studios.[4. Joe Flint, Starz strikes deal to hold on to Sony Pictures, http://www.latimes.com/entertainment/envelope/cotown/la-et-ct-sony-starz-20130211,0,3326278.story (Feb. 11, 2013).] “Pay-cable output deals are one of the most important sources of revenue for movie studios, particularly in recent years amid declining DVD sales.”[5. Ben Fritz and John Jannarone, Starz Holds On to Rights for Sony Movies, http://online.wsj.com/article/SB10001424127887324880504578298052581170998.html (Feb. 11, 2013).] From the previous deal with Sony, Starz licenses approximately 35-40 films each year to about 55 million subscribers.[6. Alex Sherman, Starz Extends Rights Deal with Sony Pictures Through 2021, http://www.bloomberg.com/news/2013-02-11/starz-extends-rights-contract-with-sony-pictures-through-2021.html (Feb. 11, 2013).]

While first-run movie rights are a high priority for premium TV networks, Starz has begun to jump on the original programming bandwagon as another source of revenue. Since, movies are now available on many other platforms, negotiations with studios for first-run movie rights have proven to be more difficult. The negotiating power on the side of the studios has risen, leaving premium channels to adapt and create their own content. Most recently, Starz has developed the original series Spartacus.[7. Ben Fritz and John Jannarone, Starz Holds On to Rights for Sony Movies, http://online.wsj.com/article/SB10001424127887324880504578298052581170998.html (Feb. 11, 2013).]

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