Liberty Media Corp. on Tuesday debuted an entertainment unit using its Starz brand to make and distribute television shows, videos, movies and other content through company-owned outlets.
The new Starz will generate about $1.3 billion in revenue annually and challenge Hollywood in niche markets such as independent film, animation, home DVDs and high-speed Internet, said Robert Clasen, chief executive of the unit.
The move culminates a year of planning and incorporates assets of IDT Entertainment into the new unit. Liberty acquired IDT in May for $186 million in cash plus debt and an unspecified amount that it already had invested in IDT.
The decision also highlights Liberty CEO Gregory Maffei’s plan to transform the Englewood, Colo.-based company from one that mostly holds assets to one that operates companies.
“What we’ve done is assembled the distribution company and the production company into one piece,” Clasen said.
For years, Liberty’s premium TV channels, Starz and Encore, have been distributors that acquired rights to old movies, then repackaged the titles and licensed them to satellite and cable TV operators that then charged a fee to their subscribers.
Starz and Encore reach about 15 million and 27 million homes, respectively, and last year Starz launched a website called Vongo from which people can download movies.
IDT Entertainment operated film and TV production companies such as Film Roman, which makes episodes of the animated series “The Simpsons” and “King of the Hill,” and Anchor Bay Entertainment, a producer in the direct-to-consumer DVD market.
In April, IDT hired former Metro-Goldwyn-Mayer Inc. Vice Chairman Chris McGurk to build a live-action movie division.
The operations of the Starz unit mirror Hollywood’s major studios but with one key difference. Major studios such as Time Warner Inc.'s Warner Bros. target mass markets. Starz will be a niche market player.
Going after small, specialized markets will make Starz look more like independent studio Lions Gate Entertainment Corp., a specialist in art-house movies, horror flicks and science fiction TV shows. Lions Gate generates about $900 million in revenue annually.
Although the major studios are slashing payroll -- Walt Disney Co. last month said it was cutting 650 jobs -- Clasen sees growth opportunities for niche-focused companies because more and more high-speed Web links are giving consumers choices over what they watch and when they watch it.
By producing its own content, Starz would rely less on licensing content from Hollywood studios.