Starz "Might Consider" Increased Spending on Originals, CEO Says

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Starz CEO Chris Albrecht

Chris Albrecht speaks at the UBS Global Media and Communications Conference in New York.

At the UBS Global Media and Communications Conference in New York on Tuesday, Starz CEO Chris Albrecht discussed possible increases in original programming spending and the company's relationship with other companies in which John Malone owns a stake.

Regarding Starz's original content strategy, Albrecht said that the company's current target of 80-90 episodes of originals a year seems like a good number, but added that "we might consider investing more money in original programming" if there was proof that there could be more revenue in it.

"There are more opportunities for shows than the amount of money that we are spending," he said. "That is why I think if we could prove that there is really additional revenue to be had and that we could grow our business, that we might consider investing more money in original programming."

The company has said it will soon reach the low end of its target range for the number of originals hours. About 13 percent of Starz programming is accounted for by original series, but they reach a broader audience and account for many of the top-rated content offerings.

Money saved from the upcoming end of a Disney output deal could go into such things as more originals, stock buybacks or investments or a combination of them, said Albrecht. He added: "I don’t see a giant, immediate opportunity to invest — certainly not all of it — in originals," but he highlighted that that is "what we do.”

Albrecht also quipped about the end of the aforementioned deal that he was "sad to see Disney go," saying that he "can’t wait to ask them how they feel about Netflix" as a new output partner down the line.

Consolidation was another big topic in his session. Liberty Media chairman Malone this year swapped part of his stake in Starz for a stake in Lionsgate. Later, Malone's Liberty Global and Discovery Communications, in which the mogul also owns a big stake, took small stakes in Lionsgate. Malone has talked about the need for "free radicals" in the content space to combine to increase their scale, leading observers to suggest he could use Lionsgate as his consolidation vehicle.

Discussing Starz's place in the possible consolidation game, Albrecht said Tuesday, "What Liberty does is up to John" and his team. Malone and Liberty CEO Greg Maffei believe in the value of content consolidation, he said, and deals would bring near-, medium- and long-term potential benefits.

Albrecht continued: "I don't really see in any of these combinations any downside." But that doesn't mean any deal would be easy and that any deal would happen, he added. "It could be multiple companies" coming together in a deal, said the exec. "We are not planning on something happening" and go to work every day running the business as an independent company, added Albrecht.

The CEO has in the past said consolidation works if it makes financial sense and creates scale benefits. Some on Wall Street have said that because of tax benefits, a possible deal involving Starz could make sense starting in 2016.

Albrecht briefly interjected during the session before his — which featured Lionsgate vice chairman Michael Burns — when he said Lionsgate now owns a stake in Starz but doesn't sit on its board. After he discussed the value of the Starz stock, Albrecht called out that it was "really valuable ... so valuable." Burns in return quipped that with the companies' new relationship, Albrecht could "eventually ... pay up for one of our shows."

Albrecht on Tuesday also discussed how Starz will get Star Wars: The Force Awakens as part of its expiring output deal. The former HBO boss said the film would hit HBO down the line before correcting himself to say Starz, quipping the mistake was due to a "flashback."

Amazon on Tuesday announced that on top of Amazon Prime it would start selling Starz, Showtime and others as add-on subscriptions, with Albrecht saying the deal highlights Starz's value. "This was a good deal for both Amazon and Starz," he said.

Starz recently said it would soon launch an over-the-top service in the U.S. as competitors HBO and Showtime have not suffered any negative repercussions from launching standalone streaming services. On Tuesday, Albrecht said the company was working on creating its own app, but was looking at all iterations of OTT and similar offerings. "We are considering everything," he said. "There is a lot of opportunity there."

"it would be shocking to me if they abandoned the distribution of premiums," Albrecht said when asked if pay TV distributors would react negatively to all the premium TV service providers, such as HBO, Showtime and Starz, going over the top. "Premiums are unique." If pay TV operators want to stay in the content distribution business, they would do well to distribute premiums, he said. Albrecht emphasized that the Amazon distribution deal is most like a traditional pay TV operator relationship.

He also said that Starz alone couldn't drive awareness for the network as well as pay TV operators, saying they are key to subscriber growth. In return, Albrecht said Starz can bring in new demographics with such shows as Power and Ash vs. The Evil Dead.

Asked about subscriber trends, the CEO said AT&T/DirecTV is now refocused on promoting Starz after DirecTV seemed a bit distracted by the telecom company's takeover of the satellite TV service.

Albrecht on Tuesday also said that "our content strategy is always evolving," and that second-generation bilingual audiences, such as Hispanics, as well as LGBT and others, are among possible target audiences for originals. He added that he had just read the latest script for Alejandro Gonzalez Inarritu's One Percent on his trip to New York and loved it.

The UBS investor conference features CEOs and other top executives from industry players. It is widely seen as the final event of the year where execs can provide an outlook for the new year and sound off on hot-button issues.

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