UPDATED with Comcast statement. Lionsgate-owned Starz has delivered another shot across the bow in its ongoing talks with Comcast, warning millions of Xfinity customers that they could lose access to the premium network on December 10. Comcast is the No. 1 U.S. cable operator, with most of its 21 million-plus subscribers coming via the Xfinity service.
In a statement (read it in full below), Starz said it “has been working diligently to reach a fair market distribution agreement with Comcast.” The statement added, “months before our contract deadline and in spite of our best efforts to engage in meaningful discussions, Comcast has publicly stated their intention to drop our networks from all packages and bundles.”
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Responding with its own statement, Comcast said, “We are continuing to negotiate to reach a deal with Starz that makes sense for us and our customers before our current deal expires, but we have been unable to do so at this time. Over the last decade, the video marketplace has evolved dramatically, with more and more streaming and direct-to-consumer offerings marketing themselves as an alternative to traditional cable. We have seen the streaming marketplace grow from essentially two services to dozens of significant OTT platforms, with more launching all the time. Starz has chosen to change its business model in response to these trends by making its content available a-la-carte on Amazon Prime and Roku and selling its service direct to the consumer through the Starz app. All we are asking for is the same treatment for our customers.”
Starz reported having 26.5 million global subscribers in August after adding 2.6 million in the quarter ending June 30, compared with the year-earlier period.
The carriage battle — one of many to unsettle the traditional TV business in recent months — is unfolding against a wealth of corporate intrigue. Lionsgate’s stock has been lagging badly in recent months — it slipped below $9 a share Wednesday, its lowest level since 2011. One concern for some investors has been the company’s exploration of options for Starz, which it acquired in late 2016 for $4.4 billion. CBS made an offer to buy the premium network earlier this year, but Lionsgate rebuffed it.
Earlier Wednesday, Comcast and Epix announced that the MGM-owned premium network had joined the premium package offered to Xfinity subscribers, with insiders noting it had been swapped for Starz. That means that Epix will now be bundled with HBO and Showtime instead of being available only a la carte. That deal takes effect December 10, the same date noted by Starz in its statement.
For Comcast, the fight with Starz comes as the company is defending itself against a racial discrimination lawsuit filed by Byron Allen. That suit is slated to be heard by the Supreme Court. Starz has become known for original series featuring diverse casts, among them Power and Vida. Power is a top draw among African-American viewers.
In an appearance last month at an investor conference, Lionsgate vice chairman Michael Burns said negotiations with Comcast “could get nasty” and Starz could end up “going to war.” Burns also called Starz a “misunderstood asset,” but maintained it complements the overall Lionsgate portfolio. Efforts to create synergies between Lionsgate’s well-established independent studio operation and the Starz programming pipeline are at a preliminary stage.
In a version of Disney’s disclaimers about how standing up Disney+ will ding its earnings in upcoming quarters, Lionsgate has advised investors of a hit to the near-term balance sheet in the name of streaming. It says the rollout of the Starz streaming service internationally will net it 15 million to 25 million new subscribers in the next five years, but will also create annual losses of up to $150 million in fiscal 2020. Profitability will come by fiscal 2023, the company has said.
The existence of an over-the-top option has sometimes complicated relations with traditional MVPDs. When Lionsgate and Altice USA reached an impasse in 2018, Altice pointed customers to the Starz OTT service, a logical move since the company also sells the broadband service used for streaming.
Here is the full Starz statement:
Starz has been working diligently to reach a fair market distribution agreement with Comcast Xfinity in order to continue providing our shared customers with access to our acclaimed line-up of premium television content. However, months before our contract deadline and in spite of our best efforts to engage in meaningful discussions, Comcast has publicly stated their intention to drop our networks from all packages and bundles, ignoring industry precedent and demonstrating a total disregard for its customers, communities, suppliers and other stakeholders.
In response, we must now alert our millions of Comcast subscribers that they will soon lose all 17 Starz channels, including Starz and Starz Encore along with our on-demand and online services without receiving any refund from Comcast for the loss of an irreplaceable premium programming lineup, including the sixth season of the hit series Power, which delivered the No. 1 series premiere in premium cable for the summer in total viewers and continues to rank as the top-rated premium series among African American audiences, upcoming seasons of fan-favorite series like Outlander, Vida and American Gods, along with our deep catalogue of over 7,500 distinct premium television episodes and exclusive blockbuster films.
Starz subscribers recognize the value of our programming, which elevates and captures diverse voices in storytelling that appeals to women, African American, Latinx and other under-served audiences. We are proud of the role we play in the lives of our fans, the communities we serve and the overall media landscape, and we remain committed to delivering our inclusive programming to customers around the world.
We continue to try to reach an agreement with Comcast that is fair, reasonable and ensures our shared customers’ continued access to a lineup of premium television content that speaks to them. In the meantime, however, we urge our customers to make it known to Comcast that there is no replacement for Starz and demand that they continue to provide access to all of your favorite Starz shows or demand a refund.
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