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Starz CEO: Amazon Pact Highlights ‘Value of Premiums’

A new deal that allows Amazon to sell add-on subscriptions of Starz to its large base of Prime members presents a new, yet similar, way to attract more customers to the premium video service, Starz CEO Chris Albrecht said Tuesday at the UBS Global Media and Communications Conference.

“It’s our first opportunity work with a digital distributor,” he said (Starz licensed its content but did not sell separate subscriptions via its long-defunct pact with Netflix).  “We see there being a lot of energy coming into the category of selling video, and I think this [deal with Amazon] highlights the value of premiums.”

Under that deal, also announced Tuesday, Amazon is selling subscriptions to Starz to its Prime members for $8.99 per month, following a free seven-day trial. As part of its program, Amazon  takes on responsibilities spanning subscriber acquisition, billing, customer service and providing the underlying streaming infrastructure. Subs who go that route will get on-demand access through Amazon to the same content that Starz makes available through its TV Everywhere apps (Starz Play, Encore Play and Multiplex Play), a live feed of Encore, and access to six linear channels from the Starz multiplex (Starz's east and west coast feeds, Starz Edge, Starz In Black, Starz Comedy, Starz Cinema, and Starz Kids & Family). Showtime’s deal with Amazon also includes titles from The Movie Channel and Showtime’s east coast live feed.

Albrecht said the Amazon deal is akin to Starz’s traditional MVPD agreements in several ways.

“They're retailers…I think this points out, again, how premium has always pulled through customers to other platform, whether it was cable customers or whether it was satellite customers or whether it was telco customers,” he said. “And now we're seeing maybe one of the world's greatest retailers, who's going to be selling premium on top of what really is their core business.”

Albrecht didn’t go into the financial terms of the deal, but said, as a “rule of thumb,” new distributors don’t get the same deal that old distributors get. But, at the baseline level, Starz has a wholesale deal with Amazon, which in many ways mirrors the kind of relationship the premium programmer has with more traditional MVPDs.

“But I think that this was a good deal for both Amazon and Starz, obviously, or those guys wouldn't have ventured into it,” he said.

Albrecht said Starz is also exploring other types of digital distribution partners and models, including some that gives Starz a more direct link to the consumer without having to manage the marketing and customer service aspects.

“I think there are plenty of interesting companies that are looking at becoming distributors of video and see the premiums as an opportunity for them to compete in a way that lets them be innovative if they have a basic video package like Amazon does,” he said. “So we are considering everything…We're being careful in the decisions that we make because what we want to do is, honestly, have our cake and eat it, too.”

Albrecht said it is hard to predict how large MVPDs will react to the Amazon deal, but said premiums remain an important part of their businesses as it’s important as ever for them to gain and retain video customers.  “It would be shocking to me if they abandon the distribution of premiums,” he said.