Analyst Expects New Netflix-Starz Streaming Deal Worth More Than $300 Million Per Year
NEW YORK - Cable cord cutting will be debunked as a myth this year, always-outspoken BTIG analyst Richard Greenfield predicted Monday.
In a report looking at likely stories and trends in the entertainment industry in 2011, he also reiterated his view that Netflix will renew its streaming content deal with Starz, which expires this year - or try to acquire it instead, a possibility that he had previously mentioned.
Greenfield predicted a new deal to be finalized late in the first quarter or early in the second for a price tag of more than $300 million per year, well above the current $30 million and Greenfield's previous estimate of $250 million per year on average.
"If no deal happens, look for Netflix to try and buy Liberty Starz," he said. "While Netflix streaming is split evenly between movie and TV viewing, Starz represents the single largest piece of the movie segment and is critical for Netflix to maintain, especially if it wants to keep shifting its subscribers away from its DVD business."
Picking up the fall and winter season's hot debate over cord cutting, Greenfield predicted that multi-channel TV subscriber figures would return to growth mode this year and "substantially reduce the “noise” related to cord-cutting that has persisted over the past six month."
Reduced investor fears could benefit cable and other TV distribution stocks, he said.
With Hulu.com, TV.com and broadcast TV network's Web sites looking to move behind authentication walls that block out people who aren't pay TV subscribers, "the days of watching your favorite show online or on mobile devices 24 hours or less after they air are quickly coming to an end" for those who don't have subscriptions to show, Greenfield also predicted.
"We expect the free, non-authenticated window to be at least 8 days (so you cannot watch the most recent episode until after the next episode airs) and believe there is sound logic to the window being at least 12 months," the analyst suggested.
Among Greenfield's other predictions for 2011:
- Continued soft DVD trends will lead studios to push for a much-discussed premium film release window in homes.
- Ad-supported movie offers from the likes of Hulu and Google will launch.
- Internet-connected televisions will create a "huge opportunity" for social gaming firm Zynga and pirated content.