Netflix, Inc. (NASDAQ:NFLX) trumps Starz (NASDAQ:STRZA) in stock performance and investing popularity, but in the real world, Netflix has 36.3 million subscribers, while Starz has amassed 57.5 million subscribers. It might appear as though Starz is undervalued. Even if we determine that’s not the case, there’s something about Starz that might make it an appealing investment option for you.
You can read all about Starz (NASDAQ:STRZA)’s fundamentals and quarterly progress, but the most important factor for this story is original content. Starz isn’t your average premium subscription video programming service. It might offer first-run movies, classics, and documentaries, but that’s not the company’s primary focus. Starz ultimately wants to be the No. 1 high-quality original content provider. If it can accomplish this goal, which it likely will, then the potential is enormous.
Netflix, Inc. (NASDAQ:NFLX) offers original content, but not to the extent of Starz (NASDAQ:STRZA), which has hit home runs with “Spartacus,” “Da Vinci’s Demons,” and “Boss.” “The White Queen” and “Magic City” have also received relatively positive feedback. Additionally, Starz has slated two new series for 2014: “Black Sails,” a pirate adventure filled with thievery, prostitution, conmen, and violence, and “Power,” a story about a New York City drug kingpin/nightclub owner who yearns for power and dreams of turning his nightclub into a Fortune 500 company.
Understanding the content is imperative because it’s what determines future revenue potential.
The man behind the curtain
Starz (NASDAQ:STRZA) CEO, Chris Albrecht, knows what he’s doing. This can be stated with confidence because he has a lot of experience in the field, and he has proven that he’s capable of delivering winning shows. As HBO CEO, he provided several hits, including “Sex and the City,” “The Sopranos,” “Band of Brothers,” “Entourage,” “Deadwood,” “The Wire,” and “Six Feet Under.” Earlier in his career at International Creative Talent, he signed Jim Carrey, Keenan Ivory Wayans, Billy Crystal, and Whoopi Goldberg. Here’s a simple and important question: is this the type of guy you want to bet against?
Albrecht is the man behind the drive for original content. He’s ahead of industry trends, which should set Starz up nicely for the future. HBO currently has 114 million subscribers. Considering Albrecht seems to be a competitive guy, do you think it ever crosses his mind that he would like to surpass that number with Starz (NASDAQ:STRZA)? Of course it does, and he eventually will.
Many investors considered Netflix, Inc. (NASDAQ:NFLX) outbidding Starz for Disney as a huge failure for Starz, but great leaders find alternative routes toward solutions. Albrecht’s aim for original content market leadership will likely pay off in a big way down the road. Do you remember when “The Sopranos” ruled the world? People would cancel plans and leave family functions early, just to rush home and watch the next episode. Starz (NASDAQ:STRZA) will eventually have a hit of this magnitude. When that happens, Starz’s popularity will shoot higher, and the ticker will become well known among retail investors.
Warren Buffett’s Berkshire Hathaway owns approximately 5% of Starz (NASDAQ:STRZA). When the broader market performs at least moderately well, Berkshire Hathaway tends to make very wise investments. This is an excellent sign for long-term investors.
Rumors continue to swirl about Starz being an acquisition target. Time Warner Cable Inc (NYSE:TWC) and CBS Corporation (NYSE:CBS) are the most common names mentioned as potential acquirers.