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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of Starz Series A Liberty Capital (NASDAQ: STRZA ) jumped as much as 11% today after the premium channel announced a deal with Sony (NYSE: SNE ) to extend their current content agreement from 2016 to 2021.
So what: Rumors had been swirling that Netflix (NASDAQ: NFLX ) was going to be the new home of Sony's theatrical productions, which include Men in Black 3 and Zero Dark Thirty, scheduled out this year, but that will not be the case. Netflix shares were down slightly on the day, and the victory for Starz seems to have surprised the market. The deal gives Starz exclusive first-run pay TV rights to show Sony Pictures releases.
Now what: With ownership of studios such as Columbia Pictures and TriStar, Sony is a valuable partner in the content wars. Today's news constitutes a big win for Starz, just a month after it was spun off from John Malone's Liberty Media. With competition heating up and bargaining power appearing to consolidate in the hands of content creators such as Sony and Disney, I'm a bit wary of stocks like Netflix and Starz. Those premium networks should bid up the price of content, and I'd like to see evidence that that's not hurting the bottom line.
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