Businessweek

Starz, LLC provides premium subscription video programming to United States (U.S.) multichannel video programming distributors (MVPDs), including cable operators, satellite television providers and telecommunications companies. The company also develops, produces, and acquires entertainment content and distributes this content to consumers in the U.S. and worldwide. The company’s operations are managed by and organized around its Starz Networks, Starz Distribution and Starz Animation operating segments. The company’s business operations are conducted by its wholly-owned subsidiaries Starz Entertainment, Film Roman, LLC (Film Roman) and certain other immaterial subsidiaries, and its majority-owned subsidiary Starz Media Group, LLC, which is owned 25% by The Weinstein Company LLC (TWC). STARZ NETWORKS Programming Networks Starz Networks’ primary premium networks are Starz and Encore. As of December 31, 2012, these networks were available for subscription in approximately 100 million U.S. multichannel households, defined as households subscribing to services offered by MVPDs, as well as over the Internet, and together Starz and Encore served approximately 56.0 million subscribers. The company’s third network, MoviePlex, offers a variety of art house, independent films and classic movie library content. Starz and Encore, along with MoviePlex, air approximately 1,000 movies monthly across 17 linear networks complemented by on-demand and Internet services. Premium networks, like Starz and Encore, air released and library film content, along with original series and specials without advertisements. Demographics The company’s Starz networks target a balanced composition of men and women in the 25-54 age group. Its Encore networks are sold in both lower level digital programming packages and together with its Starz networks in premium programming packages depending on the distributor. Encore targets male adults in the 35-50 age group (more targeted for the theme channels) with income of $50,000+ annually. MoviePlex is sold primarily in lower level digital programming packages and together with the company’s Encore networks depending on the distributor. Together with its theme channels, IndiePlex, RetroPlex, and MoviePlex targets an age range of men and women 35 and older with income of $50,000+ annually. Affiliation Agreements The company’s networks are distributed pursuant to affiliation agreements with MVPDs. The company’s existing affiliation agreements expire at various dates through 2019. As of December 31, 2012, it had 21.2 million Starz linear channel subscribers and 34.8 million Encore linear channel subscribers. Programming The programming on the company’s networks includes programming that it licenses from studios and other rights holders and original programming that it controls, either through outright ownership or through licensing arrangements. Output and Other Content License Agreements: The majority of the content on the company’s programming networks consists of films that have been released theatrically. The company has long-term output licensing agreements with The Walt Disney Company (Disney) and Sony Pictures Entertainment, Inc. (Sony) for all qualifying films released theatrically by these companies’ movie studios. Its licensing agreements cover all qualifying films that are released theatrically in the U.S. by studios owned by Disney through 2015 and all qualifying films that are released theatrically in the U.S. by studios owned by Sony through 2021. In February 2013, the company announced a new, multi-year output licensing agreement for theatrically released motion pictures from Sony that extends its relationship with Sony through 2021. The previous agreement had covered motion pictures released theatrically through 2016. The rights the company licenses from Disney and Sony on an exclusive basis during its license periods include linear television, on-demand and Internet, among others. The company licenses films released by Disney under the Disney, Touchstone, Pixar and Marvel labels. Its licensing agreement with Sony includes all titles released under the Columbia