Starz at UBS Global Media and Communications Conference

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Starz at UBS Global Media and Communications Conference THOMSON REUTERS STREETEVENTS EDITED TRANSCRIPT STRZA - Starz at UBS Global Media and Communications Conference EVENT DATE/TIME: DECEMBER 08, 2015 / 4:30PM GMT THOMSON REUTERS STREETEVENTS | www.streetevents.com | Contact Us ©2015 Thomson Reuters. All rights reserved. Republication or redistribution of Thomson Reuters content, including by framing or similar means, is prohibited without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. DECEMBER 08, 2015 / 4:30PM, STRZA - Starz at UBS Global Media and Communications Conference CORPORATE PARTICIPANTS Christopher Albrecht Starz - Chief Executive Officer & Director PRESENTATION Unidentified Participant Up with us this morning Chris Albrecht, Chief Executive Officer & Director of Starz Networks, Chris. Thanks so much for coming. Christopher Albrecht - Starz - Chief Executive Officer & Director Thanks, [Drew]. Unidentified Participant So look why don't we start out, I am sure have been asking everybody, he's had a long and industrious career, he used to run HBO, now running a public company. So what are your goals and targets right now, what would define professional success for you when you look forward? Christopher Albrecht - Starz - Chief Executive Officer & Director Look, I think one of the good things about being a Public Company's CEO is that it helps really narrow your focus on what you're trying to do, which is grow shareholder value and increase shareholder value, make the company more valuable for the people that invest. Obviously there is different ways to do that. But every decision that we think about, every decision that we make has helped us against that goal. And it's something that we think in the short term, medium term, long-term. Obviously, those are factors that are gating factors in how you make some decisions. But we obviously want to grow our business. We want to grow our top line; we want to grow our bottom line. I think it would be nice to see Starz diversified more than we are now, but ultimately the goal is to increase shareholder value. Unidentified Participant So why don't we start with your big announcement this morning, you want to sort of - for those who haven't seen it yet talk about the Amazon deal, that you announced with the implications out for Starz. Christopher Albrecht - Starz - Chief Executive Officer & Director Right, well with Amazon's announcement, but Amazon announced that they were going to be selling a few services, Starz Showtime, and a couple of other services, on top them is On Prime, and a premium tier, which is something that's always been very important to us. We're very excited about it. It's our first opportunity to work with a digital distributor. You know, when we see there being a lot of energy coming into the category of selling video and I think this highlights the value of premium. I think it highlights the value of Starz and we have a lot of excitement and confidence around Amazon team. I mean the Prime product is amazing, they are retailers. So I think this points out again, how premium has always pulled through customers to other platforms, whether it was cable customers or whether it was satellite customers or whether it was Telco customers, and now we're seeing maybe one of the world's greatest retailers, who is going to be selling premium on top of what really is their core business. And I think it kind of mirrors what's happened before. Obviously, a little different but while there may be a lot more television out there, there's still only pretty much the same number of premium channels. So the more people that realize that value both on the MVPD side and on the new distribution platform side. I think the better story it is for Starz. 2 THOMSON REUTERS STREETEVENTS | www.streetevents.com | Contact Us ©2015 Thomson Reuters. All rights reserved. Republication or redistribution of Thomson Reuters content, including by framing or similar means, is prohibited without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. DECEMBER 08, 2015 / 4:30PM, STRZA - Starz at UBS Global Media and Communications Conference Unidentified Participant And then what kind of pricing you said and how did you sort of arrive at that being the right number? Christopher Albrecht - Starz - Chief Executive Officer & Director Right, so again it's Amazon pricing. So we have a wholesale deal with them, so they're wholesalers, which again mirrors the kind of relationship that we have with the MVPDs. So I'm not at liberty to say what the wholesale price is, but they're setting a retail price now of I think $8.99 for Starz and I think that comes after a seven-day free trial. So I mean aside from the Prime package itself, there is obviously Prime Video, which is a kind of gateway, I think, the upgrade into premiums and I've been very impressed with their team, very impressed with their technology and we're looking forward to a mutually beneficial partnership with them. Unidentified Participant So I think you already said like on the wholesale side, you do not want to make a specific comment, I'll poke around a little bit to see if I get anywhere, but just in terms of the structure you already had in place with the traditional distributors, is there sort of any limiting factors as we think about you doing more of these types of deals in terms of pricing, where you could say, okay, we know it has to be in line to hire, otherwise other things get triggered, is there any sort of framework around wholesale rates for new OTT services versus traditional? Christopher Albrecht - Starz - Chief Executive Officer & Director Again, we're not giving a specific number there, but sort of the rule of thumb has always been new distributors don't get the same deal that the old distributors get. Unidentified Participant Right. Christopher Albrecht - Starz - Chief Executive Officer & Director And I think same to us and it seems a way that we can look at our long time partners and go, you want that rate, we'll have to give you that rate, but I think that this was a good deal for both Amazon and Starz, obviously or those guys wouldn't have entered into it. There aren't any really any real gating factors, I mean one of the things that we try to point out to the distribution that people talk about or ARPU and everything and, yeah, Showtime's ARPU is higher, HBO'S ARPU was higher, but one of the opportunities there is that we can go into the distributors and say we'll -- that gives a room to actually offer Starz at a price that's less than maybe you need to offer some of these other premiums and look at people in the tent and let them see how terrific the programming is, and all the movies that they get and all the features that they get and we think ours are those stick around. Unidentified Participant Well, it brings to one other question I wanted to ask you a little bit farther in the conversation was when would over-the-top launch and of course it's one thing to have Amazon start off the service, it's another thing for you to start to retail it direct to consumer yourself. Is that still something that you're considering, and what kind of timing would you put around that sort of an issue. 3 THOMSON REUTERS STREETEVENTS | www.streetevents.com | Contact Us ©2015 Thomson Reuters. All rights reserved. Republication or redistribution of Thomson Reuters content, including by framing or similar means, is prohibited without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. DECEMBER 08, 2015 / 4:30PM, STRZA - Starz at UBS Global Media and Communications Conference Christopher Albrecht - Starz - Chief Executive Officer & Director There were so many permutations of this that we consider all of them. I think the thing that we are focused on and what we've been working on is creating our own app, which creates our own experience that we have more control over and that was one of the factors in some other decisions that we made around how we would start with a pure digital distributor. I don't necessarily consider it. I get confused with OTT versus direct to consumer versus - so I think this is still a wholesale relationship that is a different avenue to the consumer. And there may be some other ones that we can take that seem more direct to the consumer without us actually being the company that has to manage all of the marketing and all of the customer service and it's obviously that that's not something that we would do, but I think there are plenty of interesting companies that are looking at becoming distributors of video and see the premiums as an opportunity for them to compete in a way that let them be innovative if they have a basic video package like Amazon does, but it also allows them to be able to be in business with what are the premium and I think they're called premium for a reason, arguably the best video services out there. So we are considering everything.
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