Tags: starz | sony | pay-tv | movies

Starz Extends Rights Contract With Sony Pictures Through 2021

Monday, 11 Feb 2013 01:57 PM

Sony Pictures Entertainment and U.S. pay-TV provider Starz extended their agreement that gives Starz exclusive rights to Sony Pictures' movies through 2021, blocking Netflix Inc. from striking a deal with the Japanese company.

Netflix signed a landmark deal with Walt Disney Co. in December, becoming the first video-delivery service to get exclusive access to Disney's major movies, stirring speculation that Netflix would go after Sony Pictures next.

Starz provided Netflix with both Disney and Sony movies until early 2012, when the two companies ended their partnership after they failed to negotiate a pricing system that required Netflix customers to pay more for some Starz content.

Starz shares rose 11 percent to $18.52 in morning trading on the Nasdaq before easing to $18.21. Netflix shares fell 2 percent to $177.50.

"We believe that the economics are very skewed towards Sony with the deal likely priced in the $300 million per year range, similar to what the Disney deal with Netflix was recently priced at," analysts at Stifel Nicolaus wrote in a note.

"While we would expect investor relief today, we continue to remain 'sell' rated as we see continued margin erosion at Starz."

Sony Pictures' films such as "The Amazing Spider-Man," "21 Jump Street," "Zero Dark Thirty," "Men In Black 3" and "Resident Evil: Retribution" will be shown on Starz channels in 2013.

The previous agreement between Sony Pictures, a unit of Sony Corp., and Starz covered film releases through 2016, the companies said in a statement.

Starz, spun off from Liberty Media last month, runs eponymous movie and TV channels, as well as the Encore movie channel. It competes with Time Warner Inc's HBO and CBS Corp's Showtime.

Netflix, on the other hand, has been trying to beef up original content and hopes its new Kevin Spacey series "House of Cards," will be the first step in its plan to shake up the television landscape.

The company reported a surprisingly strong holiday quarter in January, easing near-term concerns about its costly expansion plans and its movie and TV bill.

© 2015 Thomson/Reuters. All rights reserved.

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