Starz could benefit from skipping Disney deal: analysts
By Liana B. Baker
(Reuters) - Passing on a pricy Disney distribution deal could help premium movie channel Starz become a more attractive acquisition target for media companies when Liberty Media spins it off in late December or January, analysts say.
Netflix said on Tuesday it signed a deal with Disney that gives it exclusive rights to stream Disney movies beginning in 2016, a pact analysts estimated to be worth more than $350 million.
Starz currently has an agreement with Disney for the rights to stream movies 7 to 9 months after they come out in theaters. That deal expires in 2016.
Shares in Starz' owner, Liberty Media, fell about 5 percent on Tuesday, on concerns it will have a programming shortage. On Wednesday, the shares were up 98 cents, by 0.92 percent at $106.51.
Liberty announced in August that Starz, which runs eponymous movie and TV channels as well as Encore-branded movie channels, will become a separate listed company with about $1.5 billion of debt. The spinoff is expected in late December or early January, according to Macquarie analyst Amy Yong.
"By not entering into another partnership, we believe this increases Starz' flexibility in the event of M&A," she said in a research note.
Starz ended the third quarter with 20.8 million Starz subscribers and 34.3 Encore subscribers.
Starz becomes more attractive to a potential buyers such as Comcast and News Corp, neither of which has a premium movie cable channel, Yong said. She added that these media companies could potentially negotiate better movie deals for Starz or have their own movies to feature on Starz. Continued...