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Deal or No Deal? Why Starz Is Making Netflix Users Wait

Netflix (s NFLX) subscribers will have to wait a little longer until they can watch TV shows from Starz: (s LSTZA) The pay TV network is introducing a 90-day window for its original content starting April 1, the L.A. Times reported.

The window will take effect with the premiere of the new Starz show Camelot, which would otherwise have showed up on the service the day after each episode aired on TV.

The Starz announcement comes just two days after rival pay TV network Showtime (s CBS) declared it’s going to take some of its most popular shows, including Dexter and Californication, off the service once its deal with Netflix expires this summer. Netflix was apparently caught off guard by the two-pronged attack of the TV world, and a spokesperson told Dow Jones that the company was “perplexed” by Showtime’s plans.

Is it time to get worried about Netflix’s future? Investors don’t seem to think so, as the company’s stock went up 10 percent this week (from $208 on Monday to $230 today), and that despite that Netflix also had one of its worst outages in some time on Wednesday, with online streams being inaccessible for hours.

I think investors are right not to worry. It may look like Starz and Showtime are pulling away from Netflix, but they’re doing so for a reason: It’s called negotiations. Both Starz and Showtime are angling for new deals with Netflix, and both of them want more money.

That’s particularly the case for Starz, which Netflix got for cheap when it originally signed up with the network. Starz has not only provided original content to Netflix, but also movies from Sony (s sne) and Disney (s dis) — and Netflix reportedly paid just $30 million for it. That sweetheart deal is up early next year, and Starz wants significantly more money, especially after Netflix inked a similar deal with Epix reportedly worth $1 billion.

Of course, Starz and Showtime aren’t the only ones to take the gloves off now that these negotiations are heating up. Netflix announced last week it has secured the exclusive rights for Kevin Spacey’s new series House of Cards. The company billed this as its first step towards becoming something like an HBO (s twx) of the online world. But as Peter Kafka pointed out, that’s also a message to HBO competitors like Starz and Showtime, with Netflix effectively telling the networks that it can also get great content without them.

This week, Starz and Showtime shot back. Expect more salvos like these in coming months — until eventually, deals will be reached.

4 Responses to “Deal or No Deal? Why Starz Is Making Netflix Users Wait”

    • Barrett Garese

      Wait, artificially induced scarcity doesn’t work as a business model?!?!

      Yeah, all this is going to do is make people reconsider piracy.

      • Andy Dugan

        Sho, Starz, and HBO should make subscription services available online, like Hulu and Netflix, I’d pay for direct access to those shows without having to go through a Cable service… otherwise, Piracy is the only way to get those series without cable subscriptions.

        • Ryan Lawler

          The closest right now is probably HBO. If it offered HBO Go for $9.95 a month, I would pay for it directly. I’m sure many other people would as well. Then it wouldn’t be so reliant on cable networks.