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Starz online service signs big deal with Verizon

By Jeff Smith, Rocky Mountain News (Contact)

Published May 27, 2008 at 5 p.m.

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Douglas County-based Starz Entertainment's Internet video business received a much-needed lift Tuesday with its first major wholesale deal.

Verizon Communications announced it will offer the Starz Play online video service at $5.99 a month to its 8.5 million broadband customers.

The service enables consumers to download and watch movies and videos on their computers. It includes live Starz programming and access to a library of 2,500 movies and videos, from Hollywood hits to extreme sports, concerts and anime.

Starz Play is the wholesale version of Vongo, which is sold directly to consumers for $9.99 a month.

While Starz plans to continue selling Vongo, company executives have long said they think the biggest online video opportunities would be through wholesale agreements with telcos, cable and satellite TV companies. Verizon is a key first step.

The agreement also reflects the increasing emphasis on the Internet for a company better known for distributing Starz and Encore movie channels through traditional TV providers.

"Clearly, the Internet has become an opportunity for consumers to experience a video product," said Starz President Bill Myers, "and one thing we've been pushing is to allow customers to experience our product on any platform."

Financial terms weren't disclosed. Starz, which is owned by John Malone's Liberty Media, also announced Tuesday a multiyear expansion of its TV agreement with Verizon.

Bruce Leichtman, owner of Leichtman Research Group, said he viewed the online video deal as Starz looking to maximize profits from the entertainment content it contractually owns.

He said that selling the online video service directly to consumers is a more challenging model than working through Verizon.

smithje@RockyMountainNews.com or 303-954-5155

Features

Starz Play online video service features:

* Live streaming of the premium Starz TV channel

* Access to more than 2,500 movies and videos.

* Password-protected parental controls

* "Just for You" feature recommending titles based on user's viewing history

* Top Picks menu featuring titles most frequently downloaded by other subscribers