Starz shuts door on Netflix with Sony pay-TV deal

Starz Inc. became the latest premium cable entity to solidify its position in the subscription video-on-demand realm on Monday, with news that it has extended its pay-TV deal with Sony Pictures Entertainment through 2021.

The agreement leaves Netflix Inc. out in the cold; the online video provider had hoped to secure the Sony deal to advance its attempt to be an alternative to premium cable.

Financial terms were not disclosed. The pact was set to expire in 2016.

Under the agreement, which affirms a relationship Starz and Sony have had since 2005, Starz  will continue to be the exclusive first-run carrier of Sony’s theatrical films when they enter the pay-TV window.

Sony’s movies will be seen onthe  linear Starz and and Encore channels in standard definition and HD, subscription VOD services in standard def, HD and 3D, and its online streaming services, including the new Starz Play and Encore Play offerings.

There had been speculation that Netflix Inc. would bid aggressively for the Sony rights, on the heels of its agreement with Walt Disney Co. Last month, on Netflix’s fourth-quarter earnings call, founder Reed Hastings said his conpany’s appetite for a Sony agreement was“the same as it was for Disney,” but added that there was no piece of content his company “must have.”

Days into the new year, HBO extended its deal with Universal Pictures through 2022, in a move largely seen as way to prevent Netflix from having too large a footprint in first-run pay TV theatricals. However, Time Warner Inc. Chief Executive Jeff Bewkes downplayed that aspect of the decision, telling analysts that it merely demonstrates HBO’s commitment to movies as a core part of its strategy.

Netflix executives certainly remember the furor that resulted when Sony movies were pulled from its service during the summer of 2011 during tense negotiations with Starz about an extension of their licensing agreement beyond 2012. That negative consumer reaction  was one of the factors that bothered investors when Starz walked away from those talks.

— David B. Wilkerson