Netflix (NFLX) Shares Sink as Starz Ends Renewal Talks
Tweet
Share
E-mail
Get Alerts NFLX Hot Sheet
Join SI Premium – FREE
Shares of Netflix (Nasdaq: NFLX) are trading down in after hours Thursday following a press release by Starz stating the company will no longer be partnering with Netflix.
Shares closed at $233.27 this afternoon and are now trading down about $21, or 8.94 percent, to just under $214.
"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," commented Starz, LLC, President and Chief Executive Officer, Chris Albrecht. "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."
The decision to part with Starz may go both ways with investors as it was one of the company’s largest expenses, but at the same time it was one of the major differentiators from others such as Blockbuster, Coinstar’s (Nasdaq: CSTR) RedBox, Amazon (Nasdaq: AMZN), and Wal-mart’s (NYSE: WMT) Vudu.
This news comes on the first day Netflix's new pricing strategy takes effect. This will make it difficult for the company and investors to see the direct relationship between how many users subscribe to Netflix for Starz's premium shows alone, as many subscribers are expected to cancel this month anyway due to the increase in pricing.
Since Starz buffs are only going to be able to watch their shows on cable or by purchasing the series after it is over, companies such as Direct TV (NYSE: DTV), Dish (Nasdaq: DISH), and Comcast (Nasdaq: CMCSA) will likely benefit from the news.
Shares closed at $233.27 this afternoon and are now trading down about $21, or 8.94 percent, to just under $214.
"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," commented Starz, LLC, President and Chief Executive Officer, Chris Albrecht. "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."
The decision to part with Starz may go both ways with investors as it was one of the company’s largest expenses, but at the same time it was one of the major differentiators from others such as Blockbuster, Coinstar’s (Nasdaq: CSTR) RedBox, Amazon (Nasdaq: AMZN), and Wal-mart’s (NYSE: WMT) Vudu.
This news comes on the first day Netflix's new pricing strategy takes effect. This will make it difficult for the company and investors to see the direct relationship between how many users subscribe to Netflix for Starz's premium shows alone, as many subscribers are expected to cancel this month anyway due to the increase in pricing.
Since Starz buffs are only going to be able to watch their shows on cable or by purchasing the series after it is over, companies such as Direct TV (NYSE: DTV), Dish (Nasdaq: DISH), and Comcast (Nasdaq: CMCSA) will likely benefit from the news.
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- J.M. Smucker names Jeff Varcoe as SVP of Science and Technical
- Troops Inc. disputes short-seller report amid Hong Kong court proceedings
- Greenland Mines announces 1-for-50 reverse split, field updates
Create E-mail Alert Related Categories
Corporate News, Insiders' BlogSign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!
