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Lionsgate Shares Tumble on Report Comcast May Drop Starz

Outlander Episode 410 Starz
Courtesy of Starz/Aimee Spinks

Shares of Lionsgate fell in Friday trading after a report said Comcast had informed the company it planned to drop its premium-cable Starz network, home to series such as “Power” and “Outlander” – a move that would deprive the outlet of millions of subscribers.

A Comcast representative declined to comment and Lionsgate declined to make executives available for comment. Lionsgate’s Class A share were down 6.84% in late Friday trading, off 65 cents to $8.85 per share

One person familiar with the matter said the companies are in renewal discussions and have four months to go before their current pact ends. Talks are continuing, this person said. The Information previously reported on the possibility that Comcast could drop Starz.

The early-stage brouhaha is indicative of the new strains weighing upon relationships between programmers and cable and satellite distributors. Recent weeks have seen a plethora of blackouts and end-game maneuvers between AT&T and CBS, AT&T and Nexstar Media and Dish and a host of different programming entities. At present, the various Fox-branded regional sports networks are no longer available on Dish’s satellite service as a result of breakdown in talks between the two sides. Control over those outlets recently moved to Sinclair Broadcast Group, except for the YES Network, now controlled by a consortium that includes Sinclair, The New York Yankees and Amazon.

Starz has been in talks with other entities in recent days. On Friday, the cable outlet struck a new carrigae agreement with AT&T that calls for AT&T to offer the suite of Starz and StarzEncore networks across DirecTV, AT&T TV and U-verse.

But the Lionsgate property is essentially a standalone entity, while its main rivals, Showtime and HBO, are part of a larger corporations. Showtime is part of CBS Corp., which has placed new emphasis on collecting subscribers to a brodband-based version of the service, along with the subscription-based venue “CBS All Access.” HBO is fast becoming the linchpin of a new streaming offering from its new parent, AT&T, which acquired the pay-cable service as part of its $85 billion purchase of Time Warner. AT&T is readying the launch of another subscription-based service, HBO Max, that will build upon current broadband versions of HBO.

Dire threats are not uncommon during contract discussions between programming services and their distributors. As talks move closer to a deadline, both sides have been known to take our ads and build websites aimed at undermining their partner and even encouraging consumers to find other ways to get the programs they may be denied through traditional means.

But consumers dislike blackouts, and so too do lawmakers and regulators. Subscribers pay significant monthly fees for services like Starz, so Comcast would likely face some reprisal if it were to actually remove the service from its lineup without cutting back fees or replacing Starz with some equivalent. Comcast, like other cable providers, is grappling with the migration of traditional video subscribers to streaming services and so-called skinny bundles” that offer program packages that cost significantly less than a standard cable offering.