This article ran Friday on The Washington Post’s Web site :
As a tornado of change sweeps through the television industry, Liberty Media sits in the middle of the storm. It owns Starz and QVC, and is balancing partnerships with cable and satellite companies and new Internet distributors such as Netflix.
Liberty Chief Executive Greg Maffei hosted the Media for Liberty Awards this month at the Newseum, which honored journalists who “examine the link between economic and political liberty.”
Maffei talked to The Post about transformations in his industry and discussed the much-anticipated Starz contract renegotiation with Netflix.
The following is an edited excerpt:
With more ways to distribute your channels and shows, how is the content business these days?
Content is such a big, broad word. For content in Hollywood, the movie business is still hard. The cable business is doing great and is strong. For all the worry about viewership going into decline, cable is benefiting enormously. Newspapers are a disaster, as my friend Don Graham [Washington Post Co. chairman] will attest to.
Does that mean you still value your relationships with cable more than so-called “over the top” Internet companies like Netflix?
To the degree that you find places where over the top is adding incremental value, that’s great. But the question is, will that chew your core base? That’s one of the challenges and questions we have at Starz.
And what’s the answer?
We believe heretofore that Netflix has been incremental revenue. We continue to grow Starz on traditional platforms — we haven’t lost that audience.
How do you view those audiences differently?
When you look at Netflix, the customers come in two categories. It’s either the consumer who would never be a premium subscriber or cable subscriber at all. For example, my daughter’s friends came over and didn’t know what Starz was over cable. When I described our shows that were over Netflix, they all knew what I was talking about.
The second kind of consumer is the price-sensitive viewers who have cable but like the ease of over-the-top options at the right price.
How will things change?
All of this will change. Traditional distributors are providing on-demand Internet videos because of consumer benefits. So this will all blend.
What do you make of Time Warner’s dispute with Viacom over rights to stream video over tablet apps?
This needs to get sorted out. If you are the content owner, you want to get paid but also don’t want to limit creativity. If you prevent Time Warner Cable from streaming, you have the risk of it being pirated.
And then, you don’t want to prevent these apps from joining the market. You don’t want Netflix to be the only one with strength. I’m a little like Mao in this way, where you want a thousand flowers to bloom. You want many of these guys to be providing customers with your content.
Talk more about competition on the Internet.
What scares the heck out of Hollywood is that they see the music industry dealing with just Apple, which has so much power. Those guys have two choices: piracy or one partner. We don’t want to see that happen with video content.
How does this relate to you directly?
These things are never so clean. We are a content producer but also a buyer of content because through Starz we license Sony and Disney movies.
With that in mind, how will you approach your renegotiation with Netflix? Everyone said the licensing deal with them was so cheap that it helped Netflix become what it is today.
We have a good partnership with Netflix. It’s not exclusive and not one that I hope to do. We have the reality of channel conflict. Cable players pay us $1 billion and more a year. They pay us quite a lot of money for content to meet consumer needs. We need a level playing field, but we have to meet many needs. If Time Warner Cable and Comcast aren’t going to sell our product in our tiers and use their call centers, that’s not good for us. So we need to keep them pleased and need to figure out how to work with new partners, too.