Starz Says It Plans Deals With New Distributors After So-So Q3

Although Starz remains a “strong partner” for cable and satellite, CEO Chris Albrecht says that “in the coming weeks we plan to complete agreements with several new distribution partners” outside the traditional pay TV providers.

It won’t necessarily represent a challenge: The CEO says that cable and telco providers should find innovative ways to combine Starz with their broadband services. “This is an expanding, not a contracting, strategy.”

He adds that “one shouldn’t assume that the only path to take is the path that HBO and Showtime took.” The rival premium networks each launched direct-to-consumer Internet-based subscription services.

It’s an interesting announcement. But Wall Street seemed to greet Starz’s news with a collective yawn as the company that has been at the center of much merger speculation disclosed Q3 results that fell short of expectations.

The stock price remained flat after Starz disclosed that Q3 net income came in at $60.2 million, up 6.9% vs the period last year, on revenues of $404.1 million, down 1%. Analysts expected sales of $422.6 million. Earnings at 56 cents a share were short of the Street’s expectation of 59 cents.

Subscriptions fell by 1.8% vs the previous quarter to 55.8 million for Starz and Encore combined. Albrecht told analysts that was due to “industrywide issues” including “merger-related distractions….We’ve been told this is not a Starz-specific issues and has affected other premium channels as well.”

He says the company’s original programming — including Power, Survivor’s Remorse, Outlander, and Flesh And Bone — “is resonating with consumers, which is creating significant opportunities for us to further develop our brand with both traditional partners and new distribution platforms, ultimately creating value for shareholders.”

Over the last several months Starz has been at the center of speculation about possible deals with AMC Networks or Lionsgate. Controlling shareholder John Malone, chairman of Liberty Media, has left little doubt that he’d like Starz to find a partner.

Starz shares are up more than 25% so far in 2015, but are down 17.2% after they peaked in mid-July.