This isn’t all that complicated. Just ask the simple question… which is not “whose portfolio can this fit into?”

Ask, “For whom would STARZ/Encore offer value?”

Well… what does STARZ/Encore offer a buyer?

You’d be paying for a business in some form of stasis… not a problem business, but not a riser. The company is a pure content provider, but not a content creator of any significance.

So who is in great need of an instant filmed-entertainment cable network?

Not Comcast/NCBUniversal. Comcast serves more than 20% of the television households in the United States. If the company wants to launch another standalone filmed-entertainment cable network (in addition to Universal HD, Chiller, A&E, and USA), they are in as good a position to do it as anyone. And while any issues that competitors have with Comcast may not be an immediate issue in a STARZ buy, there is nothing assuring STARZ ongoing security beyond current carriage contracts.

Rich Greenfield, BTIG’s uber-self-promoter who has turned out to be wrong almost every time he makes a pronouncement, seems to be thinking about another era of media when he calls Comcast “the ideal buyer.” His 3-plank argument is wrong on all three fronts. 1. Movie licensing in 2012 is a series of agreements. Each one is about measuring the value of each category (on-air, VOD, streaming) at the time of each deal. Universal keeping its content “for itself” only makes sense if it can make more money by keeping the content in-house and not selling it. Another imperfection is that Comcast owning STARZ with the intent of putting Universal movie product on the network would almost inevitably require – as it did for Netflix – making a choice, aka dumping either Disney or Sony or both. Would bringing a third studio into the mix on the STARZ network increase subscriptions enough to pay for itself? Every indication is no.

2. The idea that STARZ would have more success in programming as part of Universal Television is, simply, moronic. The history of television and networks/content=-creators owned by the same company is that deals are made for all the wrong reason and content is never improved. Even if that negative is not always true – though it is a high percentage of the time – mistakes are made all the time. Jerry Bruckheimer, tied at the hip to Disney, ended up taking his TV division to WB and they sold CSI, Amazing Race, and other big hits to CBS. Owning the plantation doesn’t make the corn grow higher.

3. Universal isn’t in f-ing competition with Netflix. No content creator or distributor needs to defend themselves from or attack Netflix. Netflix still can’t afford to license STARZ content for streaming as is. Meanwhile, WB, which has been harder than any studio on Netflix and more independent-minded about the future of self-control, just did a deal with Netflix… which is likely to end as soon as WB cracks self-distribution.

Other major content creators, like Fox and WB, have been mentioned as candidates, under the theory that the prices being paid by pay-TV for movies continues to drop, so they should stop selling to that market. But right now, as I wrote before, we are in a wide-open market will all kinds of ways of generating revenue. Buying a series of channels ties a studio down (unless you’re crazy Viacom), it doesn’t open things up.

The companies for whom STARZ offers a great opportunity are the companies that cannot buy that opportunity – or built it easily – on their own. On the top of that list is Netflix.

Netflix is a company in major transition that needs stability and versatility. Owning a cable channel brand would give them just that. Obviously, the deals to stream or just to air on STARZ are separate. Buying STARZ doesn’t automatically get Netflix Disney or Sony back. But it would instantly put Netflix in the game on a different level.

In spite of the lazy writing about Netflix challenging HBO, a STARZ purchase would put Netflix in a position to compete with HBO for real… and then also have a streaming business that can remain healthy, if not burgeoning, for many years. With content sellers out there looking to sell streaming rights and airing rights, but unsure of the real value in either, Netflix/STARZ could get both, packaged together, at a discount. And until Time-Warner decides to make HBO Go or some other connected site the Home Of Warner Bros Content (or another major bellies up to the bar), Netflix would be breaking new – and inevitable – ground yet again.

Amazon is another interesting possibility. But unlike Netflix, the company has a day job. It doesn’t need to pay a premium to get into this game. And indications are that content providing is a service for the retailer, not the lead business.

But I want to reiterate… buying STARZ is only a first step, not an end in itself. Deals would be all over the place. And to really build STARZ, Netflix would have to be innovative. But that opportunity is wide open. A truly great doc channel… an indie channel… etc. STARZ is actually already in that space with Starz in Black and Edge and Encore’s various channels, including a Western channel. Good ideas. Now let’s see the execution. Let’s see some promotion… some excitement.

STARZ is one of those deals to come that takes place in the new age, where people are wise to the idea of being sold shells that have little in them. STARZ is a good business that could be better. But if the narrow thing that they offer a buyer is not what you need… if it’s just another piece of the portfolio, you would be a corporate fool to go there. The game is changing fast. Th buy-in is changing. EPIX is still limping along, even with a major and two major mini-majors.

Caveat emptor.

Unless you’re Netflix. For you, it would be a game-changing move, even if it costs a little too much.

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