This is a big deal for Starz, which you can see in the 7.8% jump in its shares in early trading this morning: Sony could be the only major studio providing recent hit movies to the premium network after 2016, when Disney moves its new releases to Netflix. The deal negotiated by Sony Pictures TV will keep the studio’s movies on Starz through 2021; the previous deal would have expired in 2016. Many analysts feared that without Sony, Starz would have to struggle to produce original shows to fill its schedule. And Starz’s market valuation likely would have plummeted if it lost Sony; Liberty Media spun off Starz last month. Janney Capital Markets’ Tony Wible observed a few weeks ago that “Sony is the only major studio Pay TV deal that anyone can hope to secure this decade.” And Barclays’ Chris Merwin noted that “other bidders, particularly Netflix and Amazon, could make competitive offers” to land Sony.
There’s no mention of financial terms in today’s release, although in an SEC filing Starz CEO Chris Albrecht says the terms “are consistent with other recent agreements between traditional premium TV networks and major Hollywood studios.” Merwin notes this morning that Universal and Fox are believed to have renewed with HBO for about $250M a year, while estimates put Netflix’s outlays for Disney at as much as $350M. But we’re told that Starz will pay Sony about $2B over the five-year extension. If that’s true then it’s just about what Wible had forecast and about twice what he figures Starz currently pays. Here’s today’s release:
Beverly Hills, Calif. — February 11, 2013 — Sony Pictures Entertainment (SPE) and Starz (NASDAQ: STRZA, STRZB) announced a new, multi-year agreement that extends their exclusive first-run output premium pay TV deal. As a result, Starz will have the exclusive pay television rights to Sony Pictures’ theatrical releases through 2021. The previous agreement between the two companies had covered motion pictures released theatrically through 2016.
Commencing with 2005 theatrical releases, Starz has been the exclusive first-run pay television home for the exhibition of Sony Pictures’ films including titles from Columbia Pictures, Sony Pictures Classics, TriStar, and Screen Gems. The new SPE-Starz agreement provides movie content for all Starz platforms including its linear STARZ and ENCORE channels in standard definition and HD, subscription VOD services in standard definition, HD On Demand and 3D On Demand, and online streaming services, including the recently launched STARZ PLAY and ENCORE PLAY. Financial terms of the agreement were not disclosed.
Big, hit Sony titles coming in 2013 exclusively on pay television to the STARZ channels and services include: The Amazing Spider-Man, 21 Jump Street, Zero Dark Thirty, The Vow, Men In Black 3, and Resident Evil: Retribution.
“STARZ and ENCORE subscribers have enjoyed the consistently stellar theatrical product from Sony, and we are thrilled to extend our exclusive partnership into the next decade,” said Chris Albrecht, Starz Chief Executive Officer. “Starz will continue to offer the richest premium TV viewing experience for our subscribers and distributors for years to come thanks to STARZ’ growing original programming slate, along with the robust lineup of new blockbuster Sony releases and our deep movie library.”
“Starz has been a terrific partner and we are excited to be extending our relationship with them through the 2021 slate,” said John Weiser, President, U.S. distribution for Sony Pictures Television.
Starz remains the exclusive home of Disney theatrical releases, including its Lucasfilm, Marvel and Pixar releases, and their accompanying digital streaming rights, into 2017.