Disney's Re-Negotiation With Starz Could Limit Netflix Ability To Offer Streaming Movies

By Russ Fischer/Jan. 15, 2010 3:25 pm EST

When Netflix partnered with the Starz network in October 2008 the deal was a serious coup. Through the deal with Starz, Netflix got access to a large library of streaming movies, and did so without having to negotiate digital rights with individual studios. Some of the Starz content is represented by old, low-quality pan and scan transfers (just try to stream The Terminator) but much of the content is quite good. If you've watched Wall-E streaming on Netflix it is thanks to the Starz deal.

Now Bloomberg is reporting on a possible change to the deal. We knew this would happen sooner or later: Disney is seeking to change the terms of the business it does with Starz.

According to the report, Starz wants licenses with Disney to allow five years of access, including cable and digital venues. Disney, meanwhile, wants those streaming the studio's films to pay a premium for the privilege. The current Starz / Disney deal expires in 2012, but as Netflix is currently making an aggressive push for streaming films, any far-reaching change in terms will have a real effect on the company's outlook.

Part of Disney's attitude may be motivated by a studio plan to build a new online subscription service. Whether this would incorporate the company's 'Keychest' technology isn't specified at this point, but that seems likely.

Starz, meanwhile, was determined to hang onto digital rights, at least as of last year. Speaking in November 2009, Starz CEO Robert Clasen stated, "Given the nature of the way the business is moving, we would be foolish to enter into an agreement that pushed back rights to the studio." Former HBO chief Chris Albrecht is now the CEO at Starz. One of his focal points is expected to be developing original content, and I haven't encountered his stance on the company's digital catalog. From a consumer standpoint, I'm rooting for Starz. If Disney is given the terms the studio wants, we'll have to jump through more hoops to stream films.