NEW YORK (TheStreet) -- Television networks are making a bad mistake licensing their shows to Netflix (NFLX) , said Starz (STRZA) CEO Chris Albrecht on Tuesday, taking a position that runs counter to much of the media industry.
"I think it's really shortsighted for all these folks to be selling their shows to Netflix," Albrecht said in an interview before investors at the UBS Media and Communications Conference in New York. "If they didn't, what would be on Netflix? A lot of old movies, some Disney (DIS) movies in a couple of years and a few shows that they make."
Yet, most television networks license some of their shows to Netflix on the assumption that it's the best and most lucrative way to generate revenue from programming that otherwise would get little airing. Apart from additional revenue, licensing non-first run shows to Netflix expands the programming's appeal to audiences that otherwise might now know it, said David Poltrack, CBS's (CBS) director of research.
"It's hard to turn down the drug, the immediate high of the money that they're paying," Albrecht said.
For Starz, based in Englewood, Col., Albrecht viewed the Netflix deal as a recipe for the network's demise. The contract was terminated as of February 2012. When Albrecht announced the end of the deal with Netflix on Sept.1, 2011, the company's shares fell 7.3% over a period of three days.
"Starz made a terrible deal with Netflix," said Albrecht, a former head of Time Warner's (TWX) HBO. "You could argue that Netflix built its business on the back of Starz programming for pennies. I got us out of that deal, we got ourselves out of that deal a few years ago."
Netflix's distribution deal with Starz, valued at about $30 million per year, supplied the monthly streaming service with a bevy of popular movies, including hits from Disney and Sony (SNE) , and TV series, which helped it attract and retain the roughly 25 million subscribers it held at the time.