On the same day Netflix implemented a controversial price hike, a strong supporter walked away from the table. Cable network Starz announced on Thursday that it will not pursue further talks with the streaming giant. Come February, both Starz original programming and its licensed movies will vanish from the Netflix instant viewing catalog.
A brief statement released by Chris Albrecht, Starz President and CEO, confirmed the move:
Starz Entertainment has ended contract renewal negotiations with Netflix. When the agreement expires on February 28, 2012, Starz will cease to distribute its content on the Netflix streaming platform. This decision is a result of our strategy to protect the premium nature of our brand by preserving the appropriate pricing and packaging of our exclusive and highly valuable content. With our current studio rights and growing original programming presence, the network is in an excellent position to evaluate new opportunities and expand its overall business.
Netflix has yet to issue an official statement on the matter.
The news immediately impacted Netflix stock, which dropped 8 percent following the announcement according to CNN Money. Of course, that's become a bit of a trend for the company this summer. Shares fell 3 percent after Netflix said it would raise the price of its unlimited streaming and DVD rental package from $9.99/month to $15.98/month.
The writing has been on the wall for some time that there was trouble in paradise between the pair.
Starz said in March that its original series would take 90 days to hit Netflix starting April 1st, with movies licensed from Sony and Disney facing similar restrictions. Over the summer, Sony films were indeed pulled from Netflix's site, though the company alleged it was due to a "temporary contract issue between Sony and Starz."
Speaking to the Washington Post, Michael Pachter, an analyst at Wedbush Securities, proposed that Starz is just playing hardball with Netflix and its possible a new deal could be struck before the February 2012 content pull deadline.
"Absolutely it's a negotiating tactic," said Pachter. "Starz wants to get headlines on the day prices go up. Consumers see that their prices are going up and their content is getting worse, and that's going to force Netflix to the table."
In July Netflix signed a new deal with NBC Universal to keep a slew of popular shows such as "Warehouse 13" and "Law & Order" in the pipeline. Pachter estimated the agreement will cost CEO Reed Hastings $300 million per year.
According to the LA Times, the same number was presented at the Netflix/Starz talks. However, Starz wanted more - a request that would have forced Netflix to jack up its own streaming subscription fees to cover it.
Are you canceling your Netflix subscription due to the loss of Starz content? Let us know in the comment section.
