Starz Ends Renewal Negotiations With Netflix; Will Cease Content Distribution In 2012

Starz and Netflix have been embroiled in negotiations over the network’s premium movie content. For the past year, the Liberty Media-owned Starz has had ongoing discussions over the terms of the agreement, which is set to expire in February 2012. The LA Times reported earlier this year that a renewal would cost Netflix more than $200 million per year. And today, Starz issued a statement stating that renewal discussions with Netflix have ended and the network would be removing its content from the Netflix library once the agreement ends next year.

From the release: Starz Entertainment has ended contract renewal negotiations with Netflix. When the agreement expires on February 28, 2012, Starz will cease to distribute its content on the Netflix streaming platform. 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. 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.

The Starz four-year deal gave Netflix more than 1,000 movies per year, including Sony and Disney titles. The deal with Starz is important to Netflix because it actually provided the movie streaming service with newer titles.

It’s definitely not a good sign that content owners are fleeing Netflix’s platform. The assumption is that Starz and Netflix couldn’t come to a financial agreement that would fit both parties (Perhaps $200 million is too much). Starz could have also been under pressure from companies like Disney, which reportedly wanted to limit the movie channel’s ability to provide movies to Netflix. Showtime also recently pulled some of its content from Netflix.

But Netflix has been able to strike new content deals for its international markets.

The first day of September hasn’t been a great day for Netflix, whose controversial price hike just rolled out today. Shares of Netflix are down over 8 percent in after-hours trading.