Starz's Sie Makes Online Deal But Says 'Heart Is With Cable'

Cable World, Dec 9, 2002

Byline: ANDREA FIGLER

Starz Encore chairman and CEO John Sie's announcement last week at the BroadbandPlus conference in Anaheim, Calif., to distribute movies via online distributor RealNetworks could prove to be a mixed blessing for cable operators.

On the one hand, operators would benefit from increased demand for cable modems, which consumers would need to get Starz movies online from RealNetworks. On the other hand, they could get Starz's movies on demand without paying a cable operator for the privilege.

"My heart is with cable, but I got to sell to every platform," Sie told Cable World last week.

Starz's relationship with cable operators will be followed closely by other networks, which are also trying to balance the effects of cable consolidation and technological innovation. This theme was addressed thoroughly at the BroadbandPlus conference despite the minimal presence of programmers on the exhibition floor. (There were only three this year: ABC Cable Networks Group, NBC Cable Networks and the Hallmark Channel.)

Fox Cable Networks Group, for example, plans to delay pitching its new extreme sports channel (see news brief, this page) to Comcast, said Lindsay Gardner, EVP of affiliate sales and marketing. Comcast is just too big and has been legally fighting other programmers, such as Starz, to get better deals, he said. Rather than duke it out right now, Gardner said he will wait until it's time to negotiate carriage deals for its more established channels, giving Fox a bit more leverage.

Primedia, Cable World's parent company, is also taking advantage of broadband via the Internet; it plans to launch an Adventure Sports video magazine this month. In a deal with RealNetworks, Primedia's digital video division is scheduled to run Adventure Sports and another video magazine, In-Fisherman, via the online distributor's Internet channels, says Tara Maitra, SVP of operations. It launched Motor Trend last month. Maitra says Primedia wants to test the waters with RealNetworks before launching with a cable operator.

Walt Disney Corp.'s Internet group is piecing together a Web page dedicated to broadband providers called the Disney Magic Connection. It will have games and learning clips - rather than programming or movies - available for free with links to buy more of the same via Disney or connect to premium programming via a cable operator, a spokesman said.

Starz is also developing two new niche networks that CEO Sie says will promote broadband. Although he would not disclose details about these networks, he says they will use the subscription model.

And if subscription-video-on-demand becomes pervasive enough in the cable industry, he will begin offering the foreign-language channels available via the International Channel in SVOD packages to operators. In fact, the SVOD ethnic niche could be key - subscriber growth for Sie's foreign-language pay channels has skyrocketed 215% this year compared with last year, a spokesperson said.

THE NEXT QUESTION:

*Will the RealNetworks deal draw more consumers overall to on-demand entertainment?