Disney has been touting its Disney+ streaming service as a potent collection of well-known brands, including Marvel, Lucasfilm and Pixar. It appears Starz is joining that list, at least in a very brief fashion and among only a subset of new subscribers to the platform, which launches next Tuesday.
As part of a broader effort to reclaim rights to a range of content, Disney and Starz reached an agreement that returned the Star Wars streaming rights to Disney in time for the launch of Disney+. In exchange, Disney has conceded to allow promotions for the Starz streaming service to appear at the end of the registration process for certain new subscribers.
Disney declined to comment on the arrangement when contacted by Deadline and Starz did not immediately respond to an inquiry. Tech site The Verge was the first to report on the arrangement.
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Disney has clawed back rights to a number of its titles it had licensed to Starz, Netflix and others for significant sums. CFO Christine McCarthy has ballparked the hit to operating profit in the current fiscal year at $500 million due to such “foregone revenue” from licensing.
At Disney’s investor day last April, Lucasfilm president Kathleen Kennedy told Wall Street analysts and assembled media that all eight previous Star Wars installments, plus spinoffs Rogue One and Solo, would be available on Disney+ at launch. While that is correct, behind the scenes it has been a complex undertaking to re-do rights deals that were conceived of when streaming was barely a gleam in Reed Hastings’ eye. Starz, for example, continues to have second-window rights to many Disney titles, so any Star Wars fans hankering for The Force Awakens, for example, can still find it on Starz.
The Starz promotion on the otherwise ad-free service will not appear across all connected devices, a person familiar with the arrangement told Deadline. It will pop up for anyone signing up through the Disney+ Android app or through Disney’s website, not the full range of devices that propel the new service. ESPN+ will also host the promo. It was described by the source as a “one-time arrangement” and not a sign of brand messages invading subscription turf.
No rolling-stock or still-image advertising is part of the arrangement, which provides for a promotion for Starz, the Lionsgate-owned premium network’s OTT service. Still, any real estate within the otherwise Disney-dominated app carries significant value.
The news of the tradeoff bubbled up as Disney, Apple, WarnerMedia and NBCUniversal are in varying stages of mounting serious alternatives to entrenched players like Netflix, Amazon and Hulu. Apple launched AppleTV+ last week and WarnerMedia’s HBO Max and NBCU’s Peacock are expected next spring. It isn’t just Disney wrestling with rights. WarnerMedia, for example, has licensed the Harry Potter films and the Matrix trilogy and would need to swing a deal to bring them back to HBO Max in the next six months.
Disney and Lionsgate executives are sure to get questions about the deal, in one form or another, in their next quarterly earnings call with Wall Street analysts. That happens to be this Thursday, when both companies report numbers and conduct their calls after the close of the trading day.
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