AT&T, Starz distribution talks appear to stall

Talks between Starz, the premium pay TV service, and telecommunications giant AT&T appear to be stalling, which could lead to a loss of popular Starz and Encore programming for some subscribers.

The two companies have been negotiating a new distribution pact for several months but have not agreed on key deal terms, according to a person close to the situation who was not authorized to publicly discuss the matter.

The deal has been extended at least once. However, that extension is set to expire before the end of July. It was unclear Friday whether Starz would grant AT&T another extension.

“Starz is in ongoing negotiations with AT&T U-verse to continue distributing its 30 Starz and Encore channels and services at a fair and reasonable rate,” a Starz representative said in a statement.

“Without a new agreement, the millions of AT&T customers who have chosen to subscribe and pay for Starz and Encore will be at risk of losing these channels and the popular original programming like ‘Power’ and ‘Outlander,’ as well as thousands of movies,” the Starz representative said.

The Starz networks boast nearly 24 million subscribers nationwide, and its companion Encore channels separately have more than 33 million subscribers.

AT&T U-verse provides TV service to about 6 million customers in the U.S. Many elect to receive Starz and Encore as an add-on service.

“We are disappointed that Starz has chosen to take our ongoing negotiations public,” an AT&T representative said Friday night. “We continue to work diligently to reach a resolution. Beyond that, we cannot comment.”

A breakdown in the distribution talks would come at an awkward time. AT&T is believed to be in the final stages of securing federal approval for its $49-billion takeover of DirecTV. That merger would make AT&T the nation’s largest pay-TV provider, with more than 25 million customers.

Starz, which is a publicly traded company, is not as diversified as other entertainment companies. It relies heavily on subscription fee revenue from pay-TV distributors, such as Time Warner Cable, DirecTV and AT&T.

Starz has had a particularly strong season with its original series.

The drama “Power” is in its second season, drawing more than 6 million viewers per episode. The show performs well among African American viewers, attracting more black viewers than any other scripted program on a premium cable channel in nearly a decade.

“Power” is co-executive produced by rapper Curtis “50 Cent” Jackson, who also costars in the series. Courtney Kemp Agboh created the show.

“Outlander” is another hit. It performs well among women and has often ranked in the top 10 cable programs with an audience of nearly 5 million viewers an episode.

“Starz has enjoyed a strong and mutually beneficial relationship with AT&T until now,” Starz said in its statement. “We are hopeful AT&T will negotiate in good faith and that we will reach a fair agreement that allows its customers to continue to get great entertainment at a good value.”

Twitter: @MegJamesLAT