Starz, Comcast battle heats up

Comcast viewers were shocked to learn early in the week that Turner Classic Movies (TCM) will be moving to their Xfinity Sports Entertainment package - which will require an extra fee per month – they learned on Wednesday that Epix will be joining a premium tier as well.

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The MGM-owned premium network had joined the premium package offered to Xfinity subscribers, with reports indicating it has been swapped for Starz. That means that Epix will now be bundled with HBO and Showtime instead of being available only a la carte.

Starz also announced on Wednesday that it has warned millions of Xfinity customers that they could lose access to the premium network on December 10 – the same day Epix’s deal takes effect.

“Starz has been working diligently to reach a fair market distribution agreement with Comcast Xfinity in order to continue providing our shared customers with access to our acclaimed line-up of premium television content,” the Lions Gate-owned company said in a statement. “However, months before our contract deadline and in spite of our best efforts to engage in meaningful discussions, Comcast has publicly stated their intention to drop our networks from all packages and bundles, ignoring industry precedent and demonstrating a total disregard for its customers, communities, suppliers and other stakeholders.”

Comcast subscribers are facing the prospect of losing 17 Starz channels - including Starz and Starz Encore – and its on-demand and online services without being given a refund from Comcast. Starz has many hit shows including Power - which continues to rank as the top-rated premium series among African American audiences - Outlander, Vida and American Gods. The network also has a catalog of over 7,500 distinct premium television episodes and exclusive blockbuster films.

Last month, in an appearance at an investor conference, Lions Gate vice chairman Michael Burns said the Comcast negotiations “could get nasty” and the companies could end up “going to war.”

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“The only thing (industry observers) can come up with, is Comcast trying to buy Lions Gate, are they trying to buy Starz, that’s really the only thing I can think of,” said Alan Wolk, co-founder and lead analyst at TVREV. “Or, they were really just that far off in negotiations because it doesn’t really make any sense why they would dump them for Epix rather than just add Epix; it’s no skin off of Comcast’s back. It seems to impact Starz negatively because a large percentage of their viewers come from Comcast. It’s sort of unclear what’s going on there. I think everybody had thought that, initially, it was just a squeeze play and they would figure it out. Obviously, somebody got somebody mad at some point.”

"Comcast has publicly stated their intention to drop our networks from all packages and bundles, ignoring industry precedent and demonstrating a total disregard for its customers, communities, suppliers and other stakeholders.”

- Starz in a statement on Comcast negotiations

The Sports Entertainment package that TCM will be a part of comes with a fee of $10 per month, and the company explained their decision on Monday – and could be a look into their thinking on Starz and Epix.

“We regularly review our programming and sometimes make changes to ensure we're offering a wide variety of programming at the best value,” Comcast said on an frequently-asked question page about their decision to move TCM off the basic package. “We look at a variety of factors, including customer viewership and programming costs when making these decisions. Viewership of TCM is low, as over 90 percent of our customers watch less than two movies per month. Given this, we decided to move TCM to the Sports Entertainment Package, which will help us manage programming costs that are passed on to our customers while continuing to make the channel available to those who want to watch it.”

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Wolk said Comcast’s move to put TCM on a separate tier “made no sense either, especially since Turner Classic fans are pretty loyal. That’s one of those networks that has an incredibly loyal and passionate fan base, you know, something that often gets cited as the value of a small, passionate fan base rather than a larger, somewhat indifferent fan base.”

TCM is owned by AT&T’s WarnerMedia, which is preparing to debut its HBO Max streaming service next year. Comcast’s NBC Universal division is also launching its own service named Peacock, after its iconic logo.

The impending streaming services might have led Comcast to put TCM on the extra pay tier, and it could be influencing their decisions on Starz as well.

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Lions Gate is launching a Starz streaming service internationally, which the company claims will net it 15 million to 25 million new subscribers in the next five years. It has also warned investors that it will also annual losses could reach $150 million in fiscal 2020, but that it should be profitable by the 2023 fiscal year.