Netflix offered Starz more than $300 million per year to renew their agreement, but the pay cable channel was insistent on so-called tiered pricing, according to people close to the negotiations but not authorized to speak on the record. Tiered pricing would require Netflix subscribers who want movies and television shows from Starz and other premium providers to pay more than the standard $8 per month.
That demand was apparently a key sticking point in talks that fell apart Thursday, meaning the two companies' deal, which began in 2008, will expire at the end of February.
Starz wanted Netflix to charge a premium price for its content in order to put the popular online video service more in line with cable and satellite providers. Protecting relationships with multiplatform video programming distributors (MVPDs) like DirecTV and Time Warner Cable is critical to Starz. The MVPDs are wary of Netflix because they fear customers will "cut the cord" if enough fresh content is available online at a lower price.
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