Pay-TV channel Starz is shooting for upwards of $350 million a year to renew its online streaming deal with Netflix, surpassing Wall Street’s already sky-high expectations, The Post has learned.
The $350 million annual figure would exceed the $250 million to $300 million range analysts had predicted, as well as the $200 million-a-year five-year deal Netflix struck last year with pay-TV channel Epix.
With the current agreement set to expire in the first quarter of 2012, there has been speculation that a renewal would cost Netflix far more than the $30 million it pays Starz now for streaming rights to movies and original series.
“They are looking at something north of $350 million,” said a top pay-TV executive familiar with Starz’s thinking. “The stock already implies a $300 million deal.”
Starz has seen its stock rise more than 45 percent in the past year. It fell $1.45 yesterday to $76.27. Netflix stock, which has soared 143 percent over the same period, closed at $270.80.
Starz has been key to Netflix’s efforts to move away from snail-mail DVDs to digital streaming. It has also provided the online version of Netflix with its freshest films, helping to grow its subscriber base to more than 20 million.
At the same time, the cut-rate deal made Net-
flix into more of a competitive threat to studios and pay-TV providers. Starz chief Chris Albrecht is under pressure to cut a deal that equates with what other distributors are forking over and, if certain targets are reached, content partner Disney will share in the rewards.
The terms of its renewal are being closely watched by both Wall Street and Hollywood, as well as cable, satellite and telco companies that also pay to air Starz programming. Cable giant Comcast is reportedly paying Starz around $220 million a year.
While Starz is shooting for the moon, Netflix boss Reed Hastings indicated a lower starting point for negotiations in an interview last month with Charlie Rose. When asked whether he would have to pay around $200 million to renew the Starz deal, Hastings replied, “Yes, that’s in the ballpark.”
“We’ve heard it could be anywhere between $200 million and $400 million,” Goldman Sachs analyst, Ingrid Chung, told The Post. “Arguably there’s more content in Starz versus Epix. We know the deal expires in the first quarter of 2012. We believe they’re actively discussing it right now.”
Netflix is widely viewed as having gotten a sweet deal from Starz in October 2008. For $30 million a year, Starz Play provides Netflix movies from Disney and Sony, among others, and includes originals such as “Spartacus: Blood and Sand.” By comparison, Netflix agreed to pay Epix, a joint venture of Paramount, Lionsgate and MGM, nearly $1 billion over five years.
But not everyone is optimistic Netflix will pay up.
“With renewal expectations in the $250 million to $300 million range, investors may be set up for a disappointment,” Stifel Nicolaus analyst Ben Mogil wrote in a note to clients. catkinson@nypost.com