The good news today for Starz, owned by Lions Gate
Entertainment, was its announcement of a signed multi-year, multi-million
dollar affiliate agreement with AT&T to distribute its premium television content,
Starz, over AT&T’s satellite (DirecTV) and telecommunication/internet
(U-verse, AT&T TV) services. In a
year where distributors and content owners are engaged in a record-breaking number
of contract disputes and blackouts (200 through the end of August), a deal is very
good news. This is especially through
for Lions Gate with AT&T, as AT&T represents more than 10% of Lions
Gate’s revenue (according to its most recent 10K report, FY ending 3/31/2019).
Today’s bad news is that Comcast, a distributor of
Starz’s content but also a competitor with plans to launch its own direct-to-consumer
streaming service next year (that will be free to its 50+ million PayTV
subscribers), leaked that it will stop carrying Starz at year end when their
affiliate agreement expires. In spite of
the hoopla surrounding cord-cutting and the increase in popularity of its own
streaming service (over 4 million subs in August), distribution via PayTV is a
must for a premium channel like Starz with 26.5 million subscribers. Loss of Comcast, the second largest MVPD
(after AT&T), would be devasting.
So, game on! How likely
is it that Comcast will drop Starz from its lineup? That depends on what Lions Gate does next. It needs to get scooped up quickly by CBS (or
AT&T) so that it can gain scale and push-back in contract negotiations over
the next four-months with Comcast and with other distributors in the months and
years ahead. A good call would be for
Lions Gate to re-initiate interest in Starz with CBS and other potential
suitors before time runs out. (Note: Lions
Gate’s passed on a $5 billion offer made by CBS for Starz about a month ago. Lions Gate paid $4.4 billion for Starz in
2016.)
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