Netflix’s Hastings May Pay $300 Million for Starz Rights
Netflix Inc. (NFLX) Chief Executive Officer Reed Hastings said it “wouldn’t be shocking” to pay as much as $300 million a year to renew a licensing agreement for movies and TV shows with Liberty Media Corp.’s Starz unit.
“We haven’t done a deal yet, so it’s hard to know,” Hastings said today at the All Things D Conference in Rancho Palos Verdes, California, in response to suggestions Netflix may pay $200 million to $300 million to renew the accord. Netflix pays more every time it renews an agreement, he said.
Netflix, the film streaming and DVD rental service based in Los Gatos, California, signed a three-year deal with Starz in 2008 for original programs and movies from Sony Corp. (6758) and Walt Disney Co. (DIS) Rich Greenfield, an analyst with BTIG LLC in New York, estimated in August 2010 that Netflix was paying $30 million under that agreement.
The deal, which expires in the first quarter of 2012, boosted subscriber growth and helped accelerate the company’s transition from a DVD-by-mail company to an online provider of movies and television shows. The service is available in the U.S. and Canada.
Netflix fell $3.54 to $267.26 at 4 p.m. New York time in Nasdaq Stock Market trading. The shares have risen 52 percent this year.
Netflix has been moving to expand its $7.99 monthly “Watch Instantly” online offering as competitors such as Hulu LLC and Amazon.com Inc. entered the market for subscription-based unlimited streaming.
‘House of Cards’
Hastings said Netflix plans to announce its expansion into a third country in the second half. The company will maintain an aggressive worldwide rollout as it secures streaming rights country by country, he said, adding such growth could hurt profits. The company plans to remain independent, he said.
The company would rather obtain all the rights to previous seasons of existing television shows than purchase more risky original content that subscribers may not like, Hastings said.
“Our preference would be to spend the money on HBO or Showtime but the check’s not big enough yet,” he said.
Until then, the company is “very flexible in terms of what content we license,” including original TV show and movies and reviving canceled television shows that appeal to subscribers, Hastings said.
Netflix in March acquired the rights for “House of Cards,” an hour-long political drama featuring Kevin Spacey. Media Rights Capital owns the series and retains domestic syndication, foreign distribution, worldwide physical media and other ancillary rights.
To contact the reporter on this story: Cliff Edwards in San Francisco at cedwards28@bloomberg.net;
To contact the editor responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net
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