The industry is abuzz about the migration of traditional TV channels to direct-to-consumer streaming options. But Starz’s carriage standoff with Altice USA demonstrates the limits at present of a standalone streaming option as an alternative to old-fashioned MVPD distribution.
The 17 Starz-Encore channels went dark on Altice USA systems as of Jan. 1 as the two sides failed to come to terms on a new contract agreement. Altice has pointed to the fact that Starz has a standalone streaming option as a reason why it is balking at paying higher carriage fees in a new deal.
Altice’s reasoning is that if customers want Starz, they can easily access to the content via the standalone app. Starz already is a premium service that requires subscribers to pay an additional monthly fee beyond basic MVPD service.
Starz CEO Chris Albrecht acknowledged to reporters on Friday that steering customers to the streaming app isn’t a panacea for lost distribution in big markets including Long Island and Connecticut. Altice USA has about 4.9 million subscribers in 21 states. Starz also wants the stability of contractual carriage fee commitments rather than the less-predictable income from standalone subscribers.
“It’s not that binary right now,” Albrecht said Friday during Starz’s portion of the Television Critics Association press tour in Pasadena, Calif. Subscribers to the OTT service need a good broadband connection and most likely a means of directing the online stream to a TV set.
“There certainly are people who are not as savvy as being able to go and get another box to connect to their television so they can watch their Starz subscription,” Albrecht said. “One of the strengths of the MVPD bundle is that it’s still serving people that want (traditional TV viewing).”
Albrecht blasted Altice for its failure to offer rebates to customers who have already paid the monthly fee for Starz. He also suggested that the company was struggling under the weight of its acquisition of the former Cablevision systems in 2016.
“This is a company that’s been beaten up,” he said. “They paid a lot of money for the systems they bought. They’ve been having a lot of difficult programming discussions. I’m sure the (Altice) board isn’t happy with the management.”
All that said, Albrecht predicted the sides will eventually come to a deal, even if communications between the companies are mostly through the media right now.
“This thing is far from over,” he said. “These negotiations are always difficult. Both sides are financially incentivized to make things work. It’s becoming increasingly a case of MVPDs wanting to pay less but still be able to charge their customers more. Obviously that doesn’t work for us.”
In a statement, Altice responded: “We are disappointed and surprised that Starz continues to engage in unproductive public spin to mislead consumers after they spent the last few months insisting on terms that would force hundreds of thousands of customers to pay for programming that they don’t watch. Despite numerous attempts by Altice USA to reach a deal, Starz refused all offers, including many offers to extend our current arrangement.”
Albrecht talked up Starz’s success in reaching multicultural audiences with shows such as drama “Power,” which he said ranks as the top-rated pay TV series in African-American homes. He said Starz is carried in 43% of African-American homes that have some form of multichannel service. Albrecht predicted that Altice will eventually face pressure from subscribers in the New York area who are missing shows. “Power” won’t be back with new episodes until later this year.
“If ‘Power’ was on Sunday we’d be in a different situation,” he said.
Albrecht was pressed about plans for the second season of its elaborate fantasy series “American Gods.” Showrunners Bryan Fuller and Michael Green have left the project — sort of — after a clash with producer FremantleMedia North America on the budget needed to deliver Season 2. Fuller and Green “were not fired, nor did they quit,” Albrecht said.
“Brian and Michael will be involved as much as they can be. It’s a little bit up in the air what their exact role will be,” he said. Neil Gaiman, author of the novel of the same name, is taking on more of the “traditional showrunner role” although he will be paired with a seasoned TV producer.
“It’s a big show, it’s a monster show. It’s faced many of the the challenges that terrific, complex premium shows face in trying to get successive seasons, especially when art comes before commerce,” Albrecht said.
Fantasy drama “Outlander” logged its most-watched season to date last year with its fourth season. There’s been no official word on a renewal for Season 5 but Albrecht said there was no doubt it will return.
“I wouldn’t worry too much about that — there’s 10 books and the show’s doing well,” he said. Starz and producer Sony Pictures TV “are having very productive discussions about the future of the show.”