Bill Myers

Starz, LLC, consists of two main businesses, Starz Entertainment and Starz Media, and through them it provides a variety of content to consumers on several platforms: theaters, traditional linear TV channels, DVDs, and on-demand services on TV and via broadband to computers and portable devices.

 

Starz Entertainment is a premium movie-service provider and operates 16 channels in the U.S., including the flagship Starz, with 17.5 million subscribers, and Encore, with 31.5 million, as well as Starz HD, Encore HD, and several on-demand services. Starz Entertainment offers more than 1,000 movies per month, and its president and COO, Bill Myers, is leading the company to cater to viewers’ “whenever, wherever” penchant for watching films and programming. Under his leadership, Starz Media has started producing original series, such as Party Down and the ambitious Spartacus: Blood and Sand, which will premiere in January and is already selling internationally. 

 

Starz Media also includes several production entities: the animation houses Film Roman, known for The Simpsons and the preschool series Wow! Wow! Wubbzy!; and Starz Animation Toronto, which produced the animation for Focus Features’ 9 and the upcoming Miramax Films/Rocket Pictures release Gnomeo & Juliet; as well as Starz Productions, a producer of live-action programming such as Lifetime’s Wisegal and Syfy’s Beyond Sherwood Forest.

 

Anchor Bay Entertainment and Manga Entertainment are Starz Media’s DVD businesses and have a combined library of more than 3,500 DVD titles, including bestselling fitness franchises like 10 Minute Solution and the classic horror franchises Halloween and The Evil Dead.

 

Overture Films develops, produces, acquires and distributes feature films. It releases between eight and ten pictures each year and, thanks to Overture’s integration with sister companies Starz Entertainment and Starz Media, those films are exploited across traditional and new-media platforms.

 

Myers is constantly on the lookout for ways of reaching and attracting consumers and enhancing their viewing experience—whether it’s a partnership between Electronic Arts and Film Roman to produce an animated movie based on Dante’s epic poem Inferno, with accompanying video games for the Xbox 360 and PlayStation 3, or a partnership with cable and technology companies to develop Enteract Now, an interactive TV feature that allows viewers easier access to on-demand programming from linear channels. Myers talks to World Screen about his vision for Starz.

 

WS: Starz has 17.5 million subscribers. Encore has 31.5 million. Despite the economic downturn, how have you been driving subscriptions?

MYERS: When you look at the pay business, particularly in today’s difficult economic environment, Starz is a great value and Encore is a great value. If you really think about getting 16 channels of ser­vice for what it might cost you to go to a movie once, and that service includes great first-run content, some terrific library and now our originals, it’s a great value for consumers. When they are staying at home and they want something new and that is free of advertisements, they migrate to the premium services. We are not immune to the economy. We’ve had some nice growth, but we’ve seen it level out a little bit. While advertiser-supported broadcasters have had significant losses, we have not. I think it’s a testament to the value of the product.

 

WS: And what role has HD played in driving subscriptions?

MYERS: It’s an extension of our product. We have great linear product. We know that consumers are changing the way they look at content and they want to look at it on different platforms, so we have a very robust on-demand offering. We’ve rolled out five HD channels and you will continue to see us roll out more. We rolled out an HD on-demand service and we’ll continue to expand that. We are starting to see that as consumers get their HD sets and get more comfortable with them, the first place they go is to HD content, and they will do anything they can to stay in that HD segment. So we are in that space, we have our five HD channels and we’ll continue to expand. It’s a beautiful way to watch, and you get spoiled with that great experience.

 

WS: You mentioned on-demand. Is that an important business, and are subscribers viewing on-demand mainly through traditional TV, or is that also growing on broadband?

MYERS: It is important. If you look at any kind of research that tells you how people will be viewing content over the next four to five years, the traditional TV is still going to be the dominant mechanism for watching content. But you will see a little bit more of that viewing being on a time-shifted basis, and where you see time-shifted, it’s going to be on-demand and on DVR. So it’s an important part of our business. And as distributors, whether it’s cable or satellite operators, improve that navigational capability to allow viewers to really surf through content on an on-demand basis, it’s going to be very important. Right now people do want to come home and have the linear-TV experience because they don’t want to deal with navigating, because it can still be somewhat complicated to get where you want to go. But if it’s easy to navigate, people do like more freedom and more control over what they watch. That’s why you’ll see us put more on-demand content as we go forward; we’ll put more titles up and we’ll put more titles in HD up because it’s important.

 

Today we are still seeing most of the on-demand viewing done on the traditional linear service. IP and broadband are nice ways to extend your brand and allow viewers to look at things on a different platform, so it’s convenient for them. But a very, very large percentage of that viewing is still on the traditional television.

 

WS: What’s your strategy toward new media? Do you want to get your product out on as many platforms as possible?

MYERS: Yes. I think anybody who owns content would be remiss not to think they need to be on as many platforms as they can be. Consumers are looking for flexibility and they want to watch content in a lot of different ways.

The one thing we don’t want to see happen is consumers leaving the Starz brand to watch content that we already own. So we want to make sure that we are out there and we want to work with our distributors to make that experience work. We already have the linear channels, we’ve done on-demand, we’ve done HD, we’ve done on-demand HD, and now we’re in the IP space. The question is, what’s next? Maybe it’s mobile—they are all extensions of that experience with Starz through our 16 traditional channels.

 

WS: We’ve all heard the mantra “Content is king.” But for a long time, large media companies believed that they had to not only own their content but also own the distribution pipes. Is that still as valid a statement today with broadband and other new-media platforms?

MYERS: If your definition of “owning the distribution pipes” is the cable distributor and connectivity to the home, people are watching in such a wide variety of ways that you can’t own all that distribution. But what’s important, when you think about Starz and the way we look at our company, we are a distribution company, because we have theatrical distribution, we have home-video distribution, we have our pay channels and we can sell product in the international syndication world. We create content primarily for those platforms. So when our Overture Films group wants to do a movie, what we are really looking at is how well will that play theatrically, how well will that play in the home-video market, is it something that is very important for the channels, and can we sell it domestically and internationally? So I always look at our company as a distribution company foremost and then we are creating content for that. But do you need to own the connectivity to the home? I don’t think so, because people are looking at content in a lot of different ways.

 

WS: For many years, Starz and Encore offered primarily movies. At what point did the idea of original programming come up?

MYERS:We had talked about originals for a long time, but we had such a strong position in the movie world and we were doing very well in that space. But in the last three or four years, as viewers have been able to get movie content in a lot of different platforms, it really became apparent to us that owning original content was going to be important for us in the long term. It does three things for us: it brings high-quality content to our consumers, which is very valuable to them. It will help us differentiate ourselves from our competitors, and the final piece is that it does give us an ancillary revenue stream—and you can see that here with Spartacus: Blood and Sand. It is going to be a terrific show on the Starz channel but it’s also going to do very well in the international TV market. After we air it, which will be in January 2010, it will come out on home video in the U.S., so we will have that product out on all platforms. But at the end of the day, consumers need to come to your service for something they can’t get anywhere else, and that is what original content will do for us.

 

WS: This past year has been tough for independents. How has Overture managed to navigate the credit crunch and still come out with an impressive slate of films?

MYERS: We structured that three years ago when we put the credit facility in place, and we’ve been fortunate that we haven’t really had to do much with it or need a whole lot more capital. I agree with your statement. We would not want to be out in the marketplace now looking for new money. But Overture hasn’t had to do much in that space over the last few years, and therefore it has allowed them to look at new ideas and projects and continue to launch new films.

 

The plan has been to release eight to ten films a year and we’re doing that. We slowed it down a little bit this year, but that’s because we’re not seeing projects that we necessarily like. At the end of the day, when you look at Starz as a company [it has] a lot of free cash flow, and if we need to we can always fund ourselves, and that’s a nice balance to the capital structure.

 

WS: Filmmaking is a risky business. Does having a bouquet of channels help offset that risk a little bit because you have a guaranteed outlet for your films?

MYERS: Yes, if you went to any studio they would say that the output agreement with a pay service is a very important piece of their economic stream. For us, since it’s all in the family, [our channels benefit from that flow of movies] because they need a lot of movies. This is content that we now own and we have a little bit more input on some of the creative aspects of the kind of movies that play very well on the channels and that we hope will play well on all the other platforms. So having that outlet is really important, and from the channels’ perspective we know we are getting content that we really like.

 

WS: Starz Animation Toronto is doing well and just got a sizeable grant from the Canadian government. What does that say about the company? And how will you use the money?

MYERS: I think it says a lot about the company and about the quality of their work. The latest movie that came out was 9, and it was critically acclaimed from an animation perspective. That really showed the quality of work that Starz Animation Toronto is capable of, and they are getting a lot of calls now to do more work. We are doing another project right now for Miramax that will be out next year. How will we spend that money? To be honest with you we haven’t worked through that yet, but I do think the grant is a testament to the quality of the work they do.

 

WS: The DVD market has been difficult lately for many companies. What has been your experience with Anchor Bay Entertainment?

MYERS: I don’t think we are any different from other folks. The challenge, which we are trying to understand, is how many of the issues in the DVD business are really related just to the economy. I could walk in to a Target, Wal-Mart or Best Buy and people are just not picking up DVDs the way they used to. Is that because they are getting that content from some other platform or is it because economically they can’t afford to buy them right now? It’s probably a little bit of both. So yes, we are seeing the same [challenges in the DVD business]. But I will say, talking to the folks at Anchor Bay, we are starting to see it settle out. I am really excited about the fact that we are starting to put more Overture Films content on DVD, and we’re putting our originals on DVD, which gives them more high-quality content to sell.

 

People are going to buy Spartacus on DVD. At the end of the day, if a second season comes out, you are going to want the first season on DVD to catch up on what you might have missed. I still think there is opportunity in that business, but we have to continue to put good quality content in there and we need the economy to rebound.

 

WS: In what areas of the company do you see the most potential for growth, and where do you see the company in two years?

MYERS: We still believe there is opportunity in our core pay-television business. We have 17.5 million Starz subs, but that is only 13-percent penetration of all homes. As cable continues to roll out its digital platforms and we are a digital service, you have to believe there is an upside in that. I see us adding new services that will continue to drive the pay-television business going forward.

 

As I said earlier, as we see the economy rebound and we start putting more content into the Anchor Bay distribution platform, I do believe there are still a lot of growth opportunities in the DVD business, and we should see that in the next several years.

We’ve got to continue to explore new-media platforms and understand what those platforms are and where our customers want us to be.

 

In three to four years, I hope we’ll have a much bigger presence in the international marketplace. We’ve done a lot in the last two to three years, but we still have great opportunities out there, whether that’s doing co-productions with international partners, or finding ways to extend the Starz brand through other distribution mechanisms in the international marketplace.

 

WS: So you see launching channels internationally?

MYERS: I think that is an opportunity that we would be foolish not to look at. We have great HD channels. We’ve got good content. We own all rights to our original content, and that’s what we’ve been trying to do and not just with our originals. When you look at Overture Films, in the best-case scenario you would want to own all rights: theatrical, home video, pay television, international distribution. We need to be more open and take advantage of opportunities in the international market. It’s an exciting time.