Bell Media has struck a deal to expand its efforts to court TV viewers, including cord-cutters who are drawn to digital streaming services. The company has partnered with Lions Gate Entertainment Corp. to launch its Starz cable channel in Canada, and to use the company's hundreds of hours of film and TV content to try to convince customers to pay more for its CraveTV digital subscription service.
The deal, announced on Tuesday, gives the media division of BCE Inc. access to a slate of movies and TV shows that it will use to launch a new pay-TV offering and to build an add-on to CraveTV, the streaming product meant to act as a competitor to digital giants such as Netflix. Starz – which owns cable channels in the United States and also produces original programming such as Outlander and The Girlfriend Experience – was purchased by film studio Lions Gate in 2016 for $4.4-billion (U.S.) Bell Media will gain rights to distribute Starz television and film content in Canada, as well as the first pay-TV and streaming window for Lions Gate movies.
Next year, Bell Media will rebrand its pay-TV channel TMN Encore to host the content. It will also stream that content digitally, at first as a free "Starz Collection" category within its CraveTV service. At a later date, Bell plans to break out that collection into an add-on package for CraveTV, in a bid to convince streaming customers to pay a premium on its $7.99 monthly subscription. Price and branding of the add-on service have yet to be determined.
Terms of the deal were not disclosed.
"The Starz partnership adds robust content growth to our digital platform strategy," Bell Media president Randy Lennox said in an interview. "We couldn't be happier to be the custodian of both Starz and Lions Gate content in Canada."
The deal is a sign of the growing competition for exclusive access to premium video content, as media companies attempt to appeal to consumers' changing TV habits. TV subscriptions have been slipping, while digital-streaming subscriptions are growing.
This means that broadcasters who make their money from TV advertising or subscriber revenues – or both – are vulnerable to shifts in viewership. Companies such as BCE that provide internet services, in addition to owning broadcast channels and providing TV subscriptions, may be more insulated, since they own the pipes people use to get their content, whether they go digital or not. But they are still angling to hold on to subscriber revenues in a changing media world.
Meanwhile, the studios from which Canadian broadcasters traditionally purchased programming rights are mounting their own digital push into this market. CBS is planning to launch its All Access streaming service in Canada some time this year. Walt Disney Co. has been working on its own streaming service, though it has not yet announced its intentions for Canada. Still, its recently announced deal to buy most of 21st Century Fox demonstrates the race among some media companies to create a bulwark of original content that they can use to compete as the business model shifts.
Streaming-only players are spending billions on content to draw people away from traditional TV subscriptions and to their services. In its fourth-quarter earnings released Monday, Netflix said it plans to spend between $7.5-billion and $8-billion (U.S.) on content this year. It now has 110.64 million subscribers worldwide. Amazon spent roughly $4.5-billion on video content last year, analysts estimated. And Apple Inc. has $1-billion set aside for content production, according to The Wall Street Journal.
Starz was one of the first content owners to pull back on deals with Netflix. In 2012, it yanked the streaming rights for 2,500 shows from Netflix, acknowledging that allowing a digital company to use Starz content to build a future competitor to its TV product "shortsighted." However, Starz has been willing to strike other partnerships for digital distribution. In the United States, it offers a standalone streaming option through the Roku digital platform; and offers digital channel subscriptions to Amazon's Prime customers. Starz now has a combined total of more than two million digital subscribers in the United States.
When asked why it did not decide to launch its own direct-to-consumer digital offering in Canada, Lions Gate's president of worldwide television and digital distribution, Jim Packer, said that the company valued the access to Bell's existing customer base, rather than "starting from scratch." BCE Inc. currently has nine million wireless subscribers, 3.8 million internet customers and 2.8 million TV subscribers.
Canada is part of a larger strategic focus for Starz to bring its brand to more global markets.
"You have to be willing, able, and flexible enough to compete any way you need to, to get your viewers, to get your subscribers," Mr. Packer said.
"You can't just do a linear [TV] channel; you can't just do direct-to-consumer; you can't just do any one thing. … You have to be comfortable being able to compete anywhere those eyeballs are. And you have to have the content. We have the content, which is key. And now we have the partner."