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Starz Encore Puts $30M Behind Digital, DBS

New York -- In an attempt to drive digital-cable and
direct-broadcast-satellite penetration, Starz Encore Group LLC last Friday launched a $30
million national branding campaign.

The company hopes its effort to drive customers to digital,
to run through July, will also provide subscribers with new reasons to get the 12 premium
and thematic movie channels it offers under its "Starz Encore Super Pak"
umbrella.

"What's needed is something magical to get people to
say, 'I want digital cable,' " Starz Encore senior vice president of marketing and
business development Mike Hale said.

To that end, Starz Encore's ads promise 12 different movie
channels for "about $12 a month." The ad includes a toll-free number that
connects callers to their cable or DBS operator of choice.

"We're platform-agnostic," Hale said. The ads are
not designed to sell the Starz Encore Super Pak as much as to help cable operators sell
their own digital packages, which may bundle the Starz, Encore and thematic channels with
other movie services, he added.

While Hale would prefer that every operator carry all 12
Super Pak channels, he said operators can be flexible on which channels they carry, how
they are packaged and how they're priced.

Cox Communications Inc., for example, carries five Encore
thematic channels -- Westerns, Love Stories, Mysteries, Action and True Stories -- in its
digital-movie tier. Although pricing varies from system to system, Cox Digital Cable costs
as little as $5.95 per month, in addition to analog, and includes Discovery Networks U.S.
digital channels, access to expanded pay-per-view, multiplexed premium channels and a
choice of three digital tiers.

In addition to the Encore thematics, the Cox digital-movie
tier typically includes Independent Film Channel, Sundance Channel and Lifetime Movie
Network.

The Starz multiplex for Cox Digital Cable customers
includes five additional channels, including BET Starz Movies.

While the MSO has no current plans to expand the number of
Starz Encore channels or to market the Starz Encore Super Pak, "we're always in
discussions with all our programmers," Cox marketing manager for digital cable
Lizbeth Dison said.

Phase one of the Starz Encore Super Pak campaign includes
ads on 13 cable networks, including USA Network, E! Entertainment Television, Fox Family
Channel and Discovery Channel. Broadcast-television ads are not part of the mix, because
the company aims to move current analog-cable customers to the digital platform.

To reach non-subscribers, the campaign includes radio ads
with the "movies, movies, movies" jingle.

The jingle will also take to the streets of Los Angeles via
"mobile billboards" -- trucks that post the Starz Encore message on their backs
while blasting the company soundtrack in an attempt to catch studio executives' attention,
Hale said.

Through its sponsorship of Indy Racing League driver Al
Unser Jr. this season, Starz Encore expects to gain additional nationwide exposure.

"You'll see the logo on the Indy 500 car, on the crew,
on the helmets, on the shirt," Hale said. "It's what [Starz Encore chairman]
John Sie always wanted, a walking billboard."

Affiliates will likely participate in local IRL races, Hale
said. Starz Encore will also use the venues to distribute postcards with the toll-free
Starz Encore Super Pak phone number.

Starz Encore will also use in-flight advertising timed with
the National Show in May. "There will be no escaping the brand from a trade or
consumer perspective," Hale said.

The programmer plans to put more cash behind the branding
campaign in the third and fourth quarters, with print ads in People and TV Guide.

At present, more than 10 million analog and digital
households receive Starz, while Encore is seen in about 14 million homes, according to
Hale. The company's ultimate aim is to overtake Home Box Office in terms of revenue, cash
flow and units sold within the next four years, Hale said.

"We're not going to take them down," Hale
admitted, pointing to the success of such recent HBO hits as The Sopranos.
"We're just going to expand the category."