Starz Will End Netflix Partnership

Negotiations over renewal break down

Netflix stock slumped in after-hours trading late today after Starz Entertainment announced that it will not renew its distribution deal with the movie rental website when its contract expires in late February. 

In a statement, Starz CEO Chris Albrecht said the decision to cease its partnership with Netflix “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."

Starz’s decision means Netflix customers will no longer have access to movie titles from Disney and Sony Pictures, since Starz served as the sole distributor of those films on the site. Sony’s content hasn’t been available on Netflix since late June, when the size of the Netflix audience grew so large that a clause was triggered in Sony’s contract with Starz mandating the removal of its titles from the site.

At the time, Netflix’s vp of content acquisition, Pauline Fischer, was quoted as saying that the disappearance of the Sony titles was "the result of a temporary contract issue between Sony and Starz."

The move is a major blow to the video site, which in recent months has found itself competing with a host of new players in the streaming market: including Amazon, which added thousands of new movie titles to its streaming rental service this July after signing a distribution deal with NBC Universal.

Since news of the contract termination emerged this afternoon, Netflix stock has tumbled 9 percent. A Netflix spokesperson wasn’t immediately available for comment.