AT&T Extends Their Deal With Starz

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AT&T U-Verse and DirecTV subscribers will continue to receive Starz, as both companies recently signed a new distribution agreement. This will allow DirecTV and AT&T subscribers to access and watch popular contents from Starz such as Power, Outlander, and all other Starz and Encore programs.

In a recent SEC filing, Starz reported about a deal with AT&T, which followed long-running negotiations between the two companies. AT&T will get the rights for Starz and Encore channels through this new agreement. Reports also indicate that A&T has also taken up equity stake in Lionsgate, and Lionsgate has guaranteed AT&T to pay three annual installments of $16.67 million after completing their merger with Starz.

Lionsgate also admitted that they have signed a recent multi-year agreement with AT&T and DirecTV to cover the electronic sell-through (EST), pay-per-view and transactional VOD. However, financial details regarding the Starz-AT&T deal and on AT&Ts separate agreement with Lionsgate are not yet disclosed by the companies.

However, AT&T made a statement about the deal and mentioned that the deal extension with Starz “is a win for our customers who will now be able to watch Starz content across all AT&T platforms, including DirecTV Now. With the Starz and Lionsgate announcements, we continue to build a robust programming lineup for our new DirecTV NOW platform that includes such premium brands as Disney, HBO, Discovery Networks, NBCU Turner and Scripps Networks.”

In an investor note, Barton Crockett, FBR & Co. analyst mentioned that Starz gave AT&T a “big double-digit step-down” to renew their deal. He added that the deal between AT&T and Starz was a “jarring outlier”, when compared with other deal extensions negotiations done by AT&T.

Starz also revealed that their network revenues would have gone down by $46 million in last year, if they had the new AT&T/DirecTV deal. They also added that their network revenues would have been lower than $20 million, if the deal was in place.

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Barton added that the “tough” step-down in Starz rates is expected to be offset by over-the-top revenues. He added, “This makes the online growth in the new Amazon/Starz deal sound impressive.”

AT&T has also signed separate deal with major companies such as HBO, Scripps Networks Interactive, NBCUniversal, and Disney. These channels will be available in all three streaming services from DirecTV, which is set for launch by the end of the year.