Street pounds Netflix for losing Starz movies
Netflix (Nasdaq: NFLX) stock was pummeled on Wall Street Friday morning, as investors reacted to news that Liberty Media Corp.'s (Nasdaq: LCAPA) Starz had pulled out of contract renewal talks with the top online video provider.
By 10:20 a.m. ET, Netflix stock was trading at $212.92, down $20.35 per share, or 8.72 percent.
Netflix will lose its ability to stream movies from Disney (NYSE: DIS) and Sony Pictures after its contract with Starz expires on Feb. 28. But it's good news for Starz's cable and satellite affiliates that had complained the streaming-video deal hurt their ability to sell Starz as a premium channel, and made it easier for consumers to cut the cord on pay TV altogether.
"This decision is a result of our strategy to protect the premium nature of our brand by preserving the appropriate pricing and packaging of our exclusive and highly valuable content," Starz CEO Chris Albrecht said in a statement issued late Thursday. "With our current studio rights and growing original programming presence, the network is in an excellent position to evaluate new opportunities and expand its overall business," he added.
It's possible that Starz and Albrecht issued the statement Thursday as a hardball negotiating tactic, and that the network will reach a new deal with Netflix before its deal expires in February. "It's a negotiating ploy, but an effective one since Netflix cannot allow Starz to leave," Wedbush Securities analyst Michael Pachter told Bloomberg.