Analyst: Starz Could Strike Online Deal With Amazon After End of Netflix Talks

3:05 PM PST 09/01/2011 by Georg Szalai
Jonathan Fickies/Bloomberg/Getty Images

Starz will "do a deal with Amazon as multi system operators like that Amazon is a threat to Netflix," says Janney's Tony Wible, while others say Google and Dish Network are possible partners, and one analyst says Starz may simply want to embarrass Netflix as a negotiating ploy.

NEW YORK - With Starz having ended its streaming video contract renewal talks with Netflix, one analyst in a first reaction said he expects Starz could now hammer out a digital deal with Amazon.com, led by CEO Jeff Bezos, now. Others also mentioned Google and satellite TV operator Dish Network as parties that could be interested.

"I think they deal with [TV distributors] that will now pay more and will do a deal with Amazon as multi system operators like that Amazon is a threat to Netflix," said Janney Montgomery Scott analyst Tony Wible. "MSOs are oddly ok with it, because they see it as the Netflix killer."

Whether Starz does or does not reach an Amazon deal, the end of the Netflix relationship is "better for its MSO customers that may be looking to pay more," Wible said. After all, Netflix was believed to have paid only $30 million a year, compared to multiples of that shelled out by pay TV operators.
 
But he and others don't expect that Starz CEO Chris Albrecht will follow the strategy of his former employer HBO, which has kept its content to itself instead of selling it to digital distributors. Some industry observers also mentioned Google and Charlie Ergen's Dish, which has acquired Blockbuster and expanded its online content offers, as players that could now swoop in and look at the Starz content.

Amazon, which is believed to be bidding for online video provider Hulu, has been expanding its online content offers. Earlier this month, it said its iTunes-type Amazon Instant Video service now offers more than 100,000 movies and TV shows, while its subscription based Amazon Prime service, bundled with a shipping service, has more than 9,000 movies and TV shows available in streaming form.

But Wedbush Securities analyst Michael Pachter suggested that Starz may have issued its statement saying that Netflix renewal talks are simply a negotiating ploy. "They need each other desperately, and am shocked they would actually walk," he told The Hollywood Reporter. "I think this is a negotiating tactic, planned to embarrass Netflix on the day their price increase goes into effect, in order to force them back to the table.

Email: Georg.Szalai@thr.com

Twitter: @georgszalai

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