Analysts attending Liberty Media’s annual investor day on Thursday will be listening carefully when Starz CEO Chris Albrecht discusses his channel’s plans. His boss, Liberty Chairman John Malone, loves to buy, sell, and swap assets — as long as he can do so without paying a big tax bill. And there’s a growing belief that Malone is positioning Starz for a deal as the company focuses its branding efforts around more than 50 hours of original programs — including Boss, Magic City, Spartacus, and Da Vinci’s Demons — instead of theatrical films from Disney and Sony. For example, BTIG analyst Rich Greenfield says in a blog post today that “a transaction may…be coming to turn Starz into an asset based security” instead of just part of the Liberty Starz tracking stock. Janney Capital Markets’ Tony Wible says that Starz’ “strategic benefits could make it an M&A target.” Maxim Group’s John Tinker agrees that Starz “should be merged into a larger entity.”
Albrecht reinforced those views recently by talking up his desire to have the channel stand out as a premium service. On Friday he elaborated at the Monaco Media Forum on points he made earlier in the week on the Liberty earnings call: The channel scrapped its effort to negotiate a new streaming deal with Netflix because it didn’t set Starz apart from the video pack. “We had a very big decision to make when it came time to renew the deal, because we had realized that premium…is something that the Netflix model was going to undermine” he told the Monaco audience. The company has told investors that it believes at least one video streamer will pay higher prices to license a classier collection of programs — to be offered either as a distinct service or a higher priced tier. That’s why “we need to turn Starz quickly into an identifiable brand” and “the words we use are tent pole television, entertaining, theatrical film look,” Albrecht says. The former HBO chief acknowledged, though, that his chief rival has a big advantage. “At HBO, we got to spend about $650M a year on original programming. Starz is about about $120M. I can tell you which one is more fun.”
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