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BY JONATHAN BLUM, KAGAN
When you prosper as Starz CEO John Sie has, your opinion does carry weight. Sie claims that the industry is making a major mistake by supporting current HD standards. He may be right. However, there could be another more pragmatic reason why Sie is opposing high-resolution content: cost. Starz Encore's gain in market share has come via intense investment in programming. Its programming costs in 2002 as a percentage of total expenses led the industry, running about 8% higher than HBO's. This exposure will probably only grow. Starz is already committed to major future content payments. Consider 2003: We estimate that Starz already owes more than the total allotted content expense for that year. Considering that Sie thinks his company's future lies in costly digital cable and SVOD technology, expensive high-res images just may have to be a thing of the future.
ESTIMATED FUTURE STARZ CONTENT
|
As of September 30 |
|
2002 |
2003 |
2004 |
2005 |
2006 |
| Current unpaid content balances |
$66 |
$81 |
$27 |
$18 |
$9 |
| Obligations for released but unavailable films |
$21 |
$345 |
$164 |
$101 |
$112 |
| Total future content obligation |
$87 |
$426 |
$191 |
$119 |
$121 |
| Estimated annualized films right expense |
$338 |
$371 |
$408 |
$449 |
$494 |
| Estimated % of total films rights expense |
25.8% |
114.7% |
46.8% |
26.5% |
24.5% |
| SOURCE: KAGAN WORLD MEDIA PROJECTIONS NOTE: ALL DOLLAR VALUES IN MILLIONS |
For the entire picture of next-generation cable technologies, see ?Kagan Broadband? at www.kagan.com/cw.
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