Movies will remain a key to Starz’s lineup “whether we have one studio or two studios” as partner, channel topper Chris Albrecht said Thursday, calling theatrical films “the bedrock” of pay TV despite a plethora of new original programming that’s ramped up the wow factor across cable.
Starz currently has output deals with Disney and Sony for availability through 2016 and 2017, respectively, Albrecht told a crowd of Wall Streeters at the annual investor meeting of the net’s parent Liberty Media in Gotham.
It wasn’t clear if “one or two” referred to those pacts or to the fact that in a shifting landscape there could be any number of deals in place within a few years.
“Both Disney and Sony are incredibly valuable partners to Starz, and we hope our relationship with both continues well into the future,” Albrecht said later through a spokeswoman.
Output deals are being rethought and renegotiated as alternate forms of distribution arise. Albrecht defended the net’s decision earlier this fall not to renew its own deal with Netflix. “It was a big-boy decision. It was an adult decision,” he said, since the pact would have eroded Starz’sw core biz and been a drain on earnings within two to three years.
He said Starz “is talking to everyone…is in very active discussions” to find another subscription video pact.
And next year it will launch its own authenticated platform for its pay TV subscribers, like HBO has, that Albrecht said “will help reduce churn and get us in front of younger eyeballs.”
Meanwhile, the net’s pursuing a diversified approach to original content: fully financed (“Spartacus,” “Magic City”); co-financed (“Da Vinci’s Demons” with BBC); and licensed (“Boss” from Lionsgate).
Albrecht’s working on ramping up hours of original programming without a massive increase in spending. “I came here to try to make Starz as successful as I can,” he said.
He was followed by Mel Karmazin, CEO of SiriusXM Radio, another company in Liberty’s portfolio. He touted the company’s growth to 21.3 million subscribers with $3 billion in annual revenue. It’s been paring down debt and moving into more and more of the nation’s cars — a key to its success. “It takes a long time…Car companies work three years in advance. We pay them to put it in,” Karmazin said.
That meant that for quite a while, SiriusXM was paying top talent like Howard Stern and car companies tons of money, posting losses and racking up debt. “Before we started making money, we lost $8 billion. That sucked then,” Karmazin said.
But he said auto installs have risen from 20% in 2006 to over 65% in 2011. Over 40 million cars on the road have satellite radio (although not all subscribe), which he estimated will nearly double to 75 million in 2015.
SiriusXM will add 1.6 million subs this year. Karmazin said it will add more in the current fourth quarter than in any period since Sirius and XM merged in the summer of 2008. Investors worry that a price hike set for next year could hurt subscriber growth.
In the latest quarter, SiriusXM profit rose 54% and revenue grew 6%.
Separately, Liberty Media announced plans to eliminate a complex system tracking stocks by combining offshoots Liberty Starz (which houses Starz) and Liberty Capital (home to its SiriusXM stake and other investments) into one new company. Liberty CEO Greg Maffei said the move would eliminating the ‘tracker discount,'” increase liquidity in the stock and create a stronger currency for acquisitions.
Each share of Liberty Starz will be converted into 0.88129 shares of Liberty Capital effective Nov. 28. The new company will trade on Nasdaq under the symbols LMCA and LMCB.
Liberty also said Starz completed a $1.5 billion senior secured credit facility, including a $1 billion five-year revolving credit facility and a $500 million five-year term loan facility.