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Starz Negotiating Time Warner Carriage

3/25/2008 10:19 AM Eastern

Starz Entertainment said in a Securities and Exchange Commission filing Tuesday that it is currently in negotiations with Time Warner Cable regarding the renewal of its carriage agreement.

According to the 10-K annual report filed by Starz parent Liberty Media on March 25, the premium movie network said that Time Warner represented more than 10% of its total revenue in 2007. According to the document, the Time Warner deal expired on Dec. 31, 2006 but was extended through April 30, 2008.

“Starz Entertainment is currently in negotiations with Time Warner regarding a new agreement, the company said in the document. “There can be no assurance that any new agreement with Time Warner will have economic terms comparable to the old agreement.”

Starz also said that its deal with satellite TV giant DirecTV is up for renewal in December 2008. In the third quarter, according to the document, DirecTV negotiated a one-year renewal agreement – retroactive to Jan. 1, 2007 – that runs through the end of December.

In the filing, Starz said that it derives about 71% of its revenue from four operators – Time Warner, Comcast, DirecTV and Dish Network. Its Comcast deal requires the nation’s largest cable operator to carry the Encore and Thematic Multiplex channels through September 2009 and Starz through December 2012. Its agreement with Dish Network expires in June 2009.

According to Starz, the new DirecTV carriage agreement called for higher rates than the premium network received from satellite giant since June 30, 2006 (when its previous agreement expired) but lower than the rates according to the old agreement. As a result, Starz said that in the third quarter of 2007, it recognized $7 million of revenue related to 2006 based on the difference between the rates provided in the new affiliation agreement and the rates previously paid by DirecTV.

While the company didn’t say when it expects to reach a new deal with DirecTV, it appears that it won’t be too difficult. Liberty, which owns 100% of Starz, closed on its purchased of a controlling interest in DirecTV from News Corp. in February.

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