Starz planning new digital strategy as Netflix deal ends

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With 21.5 million Netflix streaming subscribers set to lose access to Starz’s movies and television shows in February, the premium cable channel is planning a big digital push of its own in 2012.

Starz President Chris Albrecht said at an investor presentation in New York on Thursday that his network would launch an HBO Go-like application to allow subscribers to watch its content on a variety of digital devices.

In September, Starz decided not to renew its agreement with Netflix.

Netflix offered Starz, which has about 19 million TV subscribers, more than $300 million per year to renew the digital distribution agreement, according to people familiar with the matter who were not authorized to discuss it publicly. However, Starz wouldn’t extend the contract unless it was placed on a premium tier that cost customers additional money, a provision Netflix rejected.

Albrecht called the decision to cut ties with Netflix ‘a big boy choice’ that will benefit his company in the long term. ‘We would have eroded...our core business,’ Albrecht said at the investor conference for his channel’s parent company, Liberty Media. ‘Within two to three years the Netflix deal would have been a drag on Starz’s earnings.’

Several TV providers including Comcast and Dish Network already allow subscribers to watch Starz content, which includes movies from Sony Pictures and Walt Disney Studios along with original programs such as ‘Spartacus’ and ‘Boss,’ on their websites.

But Albrecht said Starz is building its own digital application that subscribers can watch on numerous devices that probably will include smartphones and tablets.

In addition, Albrecht said Starz is having discussions for other distribution deals with several of Netflix’s smaller competitors in subscription online video, which include Amazon.com and Blockbuster.

[Corrected at 4:15 p.m. Saturday: A previous version of this post said President Chris Albrecht was considering making Starz available to high-speed Internet customers who don’t subscribe to other cable channels. In fact, Albrecht was discussing a scenario in which people might pay for numerous channels, including Starz, over the Internet instead of through traditional cable television, a spokeswoman said Friday. In addition, the post said Liberty Media would fold Starz’s stock into its own. Liberty Starz and Liberty Capital are being combined into a single company with a new stock.]

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-- Ben Fritz