NETFLIX SUFFERS MAJOR BLOW AS STARZ PULLS OUT

Apparently finding Netflix’s success to be a threat to its own pay-TV cable operation, Starz Entertainment said Thursday that it will yank its movies from Netflix when its current contract expires in February. Starz is one of the few sources — and the major one — of recent movies for Netflix’s streaming service. Three years ago, when Netflix’s streaming service was just beginning to attract users, it reportedly agreed to a $30-million deal. In the most recent negotiations — with Netflix’s streaming customers now totaling 25 million — Starz, according to published reports, turned down $300 million. “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,” Starz, a unit of John Malone’s Liberty Media, said in a statement on Thursday. Starz charges about $15 per month to cable subscribers; Netflix, $8 a month (for streaming only). In a commentary headlined “Netflix’s Death Spiral Begins,” analyst Karl Denninger said on the SeekingAlpha.com website: “The ‘$8 all you can eat’ video buffet just ran out of food.” However, Netflix CEO Reed Hastings suggested in an interview with the Business Insider that the loss of Starz was not especially harmful — that Starz content accounts for just 8 percent of Netflix’s U.S. traffic. Netflix closed down nearly 9 percent on the Nasdaq Friday to $213.11. In mid-July, when it announced price hikes, it was trading at more than $300.