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Things haven’t been going so well for Netflix of late, but Starz isn’t gloating.
“We’re certainly not reveling in their decline,” said Greg Maffei, CEO of Liberty Media, the parent of Starz.
Maffei was speaking Monday at an investors conference in New York, where he was asked about his decision to end a relationship with Netflix, a company that has struggled with a sinking stock price and falling reputation lately.
Maffei indicated that supplying Starz content to Netflix, or another third party, might not make sense right now because he doesn’t want to alienate his primary customers: providers of TV.
“You just can’t have a non-premium type price and offering of a premium service that doesn’t create enormous channel conflict,” Maffei said at the UBS Global Media and Communications Conference.
“Our product is marketed through cable companies, satellite companies, telcos,” he said. “You have to provide an offering that works for them. To put it into perspective, we have $1.3 billion in revenue from those guys. What can we get on the digital side?”
Instead of bemoaning lost revenue from Netflix, Maffei praised Starz’s chief competitor, HBO, for its in-house, streaming on-demand application, HBO GO, even though it’s probably not a moneymaker.
“HBO Go is an awesome product. I give them full credit,” he said. “It’s not generating incremental revenue for them, it’s reducing churn.”
He also compared Starz to HBO in another way: Neither of them has a deal with Netflix or similar subscription streaming service.
“Put aside Starz – and let’s be candid — HBO has a stronger offering than we do, and they’re not on to cross that bridge. I think it’s a bridge we’re unlikely to cross soon.”
Offering his own customers streaming content, though, is more palatable.
“The TV Everywhere initiative and expanding the digital offering to authenticated subscribers makes a ton of sense,” he said.
Addressing whether consolidation in the pay TV industry is needed, Maffei suggested Starz would make a good acquisition. “There are benefits, perhaps, to somebody owning Starz.”
Then he disparaged the TV industry for bundling channels.
“What happens to the bundle of cable if you keep pushing it higher and higher, and saying, ‘Sports, hey, everybody needs the Longhorn network. You’re really not interested in Texas football? Screw you. You’re gonna get it anyway.’”
Pay TV providers should refrain from “making people eat that bundle at some higher and higher price,” he said.
He even warned his “good friend Bob Iger,” CEO of Disney, that ESPN might be commanding too high a price, though he acknowledged it’s a good problem to have.
“When ESPN 1 is $8.50 in a few years, and it’s a tax on every American household, and you put 12 bucks on all the ESPN bundles, that’s $250 a year probably to the consumer. That creates a lot of opportunity for people to come underneath with a disaggregated individual offering, and what does that pressure do to these cable networks?” he said. “It has been the golden goose, but what does it take to choke it?”
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