• by David Goetzl , May 14, 2008

Liberty Media's top executive largely dismissed any potential threat from the planned Viacom-MGM-Lionsgate "premium channel" set for next year.

 

CEO Greg Maffei enumerated the reasons Tuesday why the channel--despite its strong backers--may struggle. No distribution deals that could be complicated by pricey sub fees, a lack of consumer demand and a deal where Liberty holds the rights to potentially "attractive content" for the network. Liberty operates the Starz and Encore portfolio of pay-TV channels.

"There's been no successful pay-TV channel in the movie business created without the backing of a strong distributor," Maffei said at an industry event. "Heretofore, they don't have one in that partnership. It's not obvious where they're doing to get one." Maffei also said a $2 to $3 per-sub fee the network appears to be seeking is likely to deter MSOs.

Liberty, in turn, controls 48% of DirecTV--a possible distribution partner that might be unwilling to help a competitor, although such a move could have legal ramifications.

Still, Viacom may be able to leverage its array of MTV Networks channels to gain carriage deals. The channel, set to launch in the fall of 2009, was only announced a month ago. Maffei's questions about distribution opportunities may be premature.

But Maffei said he's not convinced that viewers are seeking another pay-TV, movie-based channel to join the portfolios offered by Starz, HBO and Showtime. "It's not obvious that there's consumer demand for a fourth movie channel," he said. "We'll see."

Plus, he noted, Starz holds the rights to many "attractive" films from the Paramount and MGM libraries through 2012, limiting some of the new channel's potential content. When that deal expires, Starz would be expected to continue its relationship with Sony and Disney, giving it highly competitive content.

The new channel is a joint venture, involving Viacom's Paramount studio, MGM and Lionsgate, and aims to offer "a next-generation premium" channel and VOD service that displays new and classic films and original series. It will have rights to Paramount titles released in theaters this year, and MGM (also United Artists) and Lionsgate films out after next Jan. 1.

Maffei said Starz will continue to dip its toe into developing its own original series. Ironically, one is a TV version of hit film "Crash," developed in partnership with Lionsgate and scheduled for release late this year.

The series marks Starz's first original drama. Earlier this year, Starz launched two comedies: "Head Case" and "Hollywood Residential."