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Starz Earnings Lower Despite Revenue Gains

Starz increased revenue and subscribers in the second
quarter but higher production costs and interest expenses pushed net income

Net income fell to $63.9 million, or 52 cents a share, from
$68.7 million, or 57 cents a share, a year ago.

Revenue rose 29% to $517 million.

Subscriptions to Starz increased by 5% to 21.8 million and
subscriptions to Encore increased 3% to 35.1 million since June 30, 2012, the
company said.

"Starz delivered solid operational and financial
performance in the second quarter.  We achieved a new all-time subscriber
high at Starz with nearly 22 million subscribers.  We are also very
pleased with the new, multiyear multiplatform distribution agreement with Time
Warner Cable," Starz CEO Chris Albrecht said in a statement. "We are well
positioned to continue momentum with our original programming heading into 2014
where five series are now scheduled to air on our flagship network

At Starz Networks, contractual terms under affiliation
agreements with two distributors resulted in a one-time recognition of $18.6
million of previously deferred revenue. The revenue led to higher
operating income at Starz Networks, but was offset by increased advertising and
market costs as the company launched two original series, compared to one a
year ago.

and acquisition costs rose to $113.3 million from $39.4 million a year ago.