Sony movies still off Netflix in Starz dispute

Mon Jun 20, 2011 7:20pm EDT
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By Yinka Adegoke

NEW YORK (Reuters) - Netflix Inc's online video subscribers have not had access to movies distributed by Sony Corp Pictures Entertainment for four days, due to a dispute between the studio and its pay-TV partner Starz Entertainment.

Starz is the exclusive distributor of first-run Sony and Walt Disney Co movies on pay-TV in the United States under and an agreement which allowed it to distribute the programing wholesale on multiple platforms including online streaming.

But Netflix, which has grown faster than partners expected in the last 18 months triggered a deal clause last quarter when it announced that it now has more than 22.8 million subscribers in the U.S. of which nearly two-thirds were streaming videos, according to one source familiar the situation.

The source said under terms of the original contract the trigger allows Sony to ask Starz for better financial terms.

Another source familiar with the situation said Starz had allowed the Netflix streaming service to hit a licensing usage cap which had been agreed with Sony. This means Starz now needs to work out a new streaming agreement with the Hollywood studio before the programing can be returned to Netflix, the person said.

Starz is owned by media mogul John Malone's Liberty Media.

Starz asked Netflix to take the Sony movies down temporarily while it works out a new deal, one of the sources said.

Netflix complied on Friday saying in a blog post that Sony movies through StarzPlay were not currently available to watch instantly because of "a temporary contract issue between Sony and Starz."   Continued...

<p>Netflix Chief Executive Officer Reed Hastings speaks during the launch of streaming internet subscription services for movies and television shows to televisions and computers in Canada, at a news conference in Toronto September 22, 2010. REUTERS/ Mike Cassese</p>