Media moguls launch new cable TV movie channel; information superhighway gets new competitor for HBO.

Information superhighway gets new competitor for HBO 

With the Feb. 1 service launch of Starz!, a new premium movie cable television channel, the competitive heat on the nation's nascent electronic superhighway has been turned up.

By signing previously announced deals worth $2.3 billion with several major movie studios including Walt Disney Co. and MCA Inc., Starz! is attempting to challenge the industry's giant, Home Box Office Inc.

HBO has more than 23 million subscribers and is owned by Time Warner Inc., which also owns cable television operators around the U.S. Starz! is being launched by Denver-based Encore Media Corp., owned by Liberty Media Corp. Liberty is a spin-off of Tele-Communications Inc., the largest cable operator in America. Financial backing for Starz! has been put up by TCI.

Starz! is an outgrowth of Encore, a movie channel that features films from the 1960s, 1970s and 1980s. The Encore channel debuted in 1991 and has 4.5 million subscribers. It has been profitable since 1993, according to John Sie, chairman and CEO. Starz! and Encore are being packaged together for the $4.95 price. Both Time Warner and TCI are laying fiber optic cable all across America to enable their cable systems to offer the much-ballyhooed 500 channels of cable TV programming. Media executives are betting that movies will be the linchpin for much of the new programming and for added revenues to be derive from this expanded capacity.

By establishing a Starz! franchise now, when channel capacity of most operators still is limited, TCI is seeking to establish its position on the programming side in the future, entertainment executives said.

Starz! will not be available to many Southland viewers, at least this year, because TCI is a not a major player in the Southland cable operating market. It has just 45,000 subscribers in the county in Arcadia, Hacienda Heights, Pico Rivera, Baldwin Park and Van Nuys.

Sie is aware of that hole in his marketing of the new service, but hopes to have penetration here in the next two years.

Starz! has a 10-year deal to offer more than 360 films that come out of Disney's Touchstone and Hollywood Pictures operations, beginning in 1997. But Miramax, another Disney imprint, is making its films available to Starz! immediately. Disney's animated films come out of its Disney Pictures unit and those films end up on the Disney Channel, which has 7.1 million subscribers and won't be part of the Starz! package.

MCA signed a five-year exclusive deal, making Starz! the cable TV outlet for its Universal Pictures product starting with Christmas 1992 releases. However, Universal's two big 1993 hits, "Jurassic Park" and "Schindler's List," are not part of the agreement, according to Sidney Sheinberg, MCA's chief executive. MCA must consult with those films' producer/director Steven Spielberg who shares cable rights with MCA on "Jurassic Park" and "Schindler's List."

Sheinberg said no decision has been reached on where and when the dino-blockbuster will hit the small screen. It will be released later this year in video he said.

"E.T.," Universal's and the industry's biggest hit ever, was packaged as a special broadcast television event and it bypassed cable television altogether. MCA has been the only major studio in recent years to not have a cable rights deal with any service.

In addition to Disney and Universal, Starz! has sewn up rights to future Carolco, and New Line Cinema films.

Sie said Starz! will be different from the other movie channels because it will offer a broader range, mixing commercial fare with more art-house and cutting-edge movies. However, it will steer clear of exploitation films that feature gratuitous sex and violence. R films will be part of the mix, but not NC-17.

Reaching out to companies like Miramax and New Line will give these smaller studios more revenues to make bigger-budgeted films and to take more risks, according to Harvey Weinstein, chairman at Miramax, which is now part of the Walt Disney Co. but operates autonomously.

Sheinberg expressed full support for Starz! and went out of his way to criticize HBO, with which the studio had a relationship in the channel's infancy over a decade ago but which fell apart.

"Historically our relationship has not been felicitous," he said. "We are excited about being courted (by Starz!) and being told, 'We want to do something new and you can be important to us.' This is distinguished by (HBO's) approach of 'We don't need you, but if you are prepared to beg and offer us the worst deal, we will consider talking to you.'"

Sheinberg said Starz! did not pay excessively to gain rights to Universal films. HBO executives did not return phone calls seeking comment. Meanwhile, executives at rival movie channel Showtime -- owned by Viacom Inc. -- have expressed fears that their services will be dropped by TCI systems to clear channel capacity for Starz! Winston Cox, Showtime president, has labeled Starz! a "TCI-Encore cabal." No details on Encore's individual deals have been announced but industry estimates predict the Starz! pact could bring in between $350 million and $500 million for MCA over the length of the deal. The Disney deal would be for at least double those amounts because of the length of time and the amount of films.

There has not been a major challenge to HBO in the last decade. Viacom's Showtime and Movie Channel are other players but have not posed a serious threat to HBO and have not been gaining paid subscribers. Showtime has 7.6 million subscribers while Movie Channel has 2.7 million.

Sie, Encore's chairman and CEO, said at a Feb. 1 press conference that Starz! would need 3 million subscribers by the end of 1994 to be profitable and the goal is to reach 10 million viewers in four years.

Initially, the service is available only on TCI systems but will go to outside systems in 1995.

To kick off the service, Starz! showed Universal's "Scent of a Woman." Spike Lee's "Jungle Fever," another Universal Picture release, was shown last weekend (Feb. 5), and "The Crying Game" from Miramax will make its cable debut on Feb. 26.