WHEN: Today, Tuesday, December 9th
WHERE: CNBC's "Squawk on the Street"
Following is the unofficial transcript of a CNBC EXCLUSIVE interview with Starz CEO Chris Albrecht on CNBC's "Squawk on the Street" today. Following are links to the video on CNBC.com: http://video.cnbc.com/gallery/?video=3000337739 and http://video.cnbc.com/gallery/?video=3000337486.
All references must be sourced to CNBC.
CARL QUINTANILLA: DAVID FABER IS LIVE IN MIDTOWN AT THE UBS MEDIA CONFERENCE WHERE INDUSTRY LEADERS ARE DISCUSSING BIG TRENDS THAT ARE CHANGING THE MEDIA LANDSCAPE. HE JOINS US THIS MORNING WITH ONE OF THOSE LEADERS, THE CEO OF STARZ IN AN EXCLUSIVE.
DAVID FABER: HEY, CARL. THAT IS RIGHT. WE START OFF WITH CHRIS ALBRECHT LUCKILY ENOUGH. THE CEO OF STARZ AS YOU SAID WHO PRESENTED HERE AT THE UBS CONFERENCE A BIT AGO. GOOD TO SEE YOU AGAIN.
CHRIS ALBRECHT: AND YOU AS WELL, SIR.
FABER: IT HAS BEEN A LITTLE WHILE SINCE YOU JOINED ME. I THINK IT WAS THE NYSE. ALRIGHT, GIVEN ALL THE NEWS, I JUST HAVE TO ASK RIGHT OUT. IS STARZ FOR SALE?
ALBRECHT: YOU KNOW, WE HAVE NEVER PUT THE COMPANY UP FOR SALE. WE WERE NEVER ON AN AUCTION. AS YOU KNOW, THERE IS A SMALL GROUP OF PEOPLE THAT RUN THESE MEDIA COMPANIES. THEY ARE EITHER PERSONAL FRIENDS OF MINE, LONG TIME COLLEAGUES, OR BOTH. ONE OF THE KEY RATIONALES FOR SPINNING STARZ OUT FROM LIBERTY WAS TO MAKE IT MORE FLEXIBLE IN MAKING STRATEGIC ALLIANCES WITH COMPANIES THAT CAN HELP US GROW OUR BUSINESS. THOSE CONVERSATIONS GO ON ALL THE TIME.
FABER: SO WERE THEY MISINTERPRETED? OR, I MEAN, YOU KNOW, IT'S NOT AS THOUGH WE HEAR THESE THINGS OUT OF THE BLUE. AND I HAVE HEARD THEM AS WELL. WERE THEY MISINTERPRETED OR IS CONCEIVABLY LOOKING FOR A STRATEGIC OPPORTUNITY THAT ACTUALLY INCLUDES GETTING BOUGHT SOMETHING YOU ARE DOING?
ALBRECHT: SO, I HAVE SAID FROM THE BEGINNING SELLING YOUR COMPANY IS NOT A STRATEGY. AT THE SAME TIME WE HAVE AN OBLIGATION TO SHAREHOLDERS IF PEOPLE WANT TO TALK TO US ABOUT BUYING THE COMPANY, THAT IS A VERY DIFFERENT STATEMENT THAN WE ARE SELLING THE COMPANY. WE ARE VERY SECURE IN THE STRATEGY THAT WE HAVE OF TRANSFORMING FROM AN ALL-MOVIE BASED SERVICE TO MOVIE AND ORIGINALS. IT'S A STRATEGY THAT'S WORKING. WE ARE ADDING SUBSCRIBERS. OUR DISTRIBUTORS LIKE IT. WE GOT A LOT OF PROGRAMS THAT PEOPLE ARE TALKING ABOUT. WE HAVE AN INTERNATIONAL OPPORTUNITY TO GROW A BUSINESS OUTSIDE THE U.S. IN WAYS THAT WE HAVEN'T HAD BEFORE. SO, YOU KNOW, WE ARE GOING TO TALK TO ANYBODY AND CONSIDER ANYTHING THAT IS GOING TO BE GOOD FOR OUR BUSINESS.
FABER: RIGHT. BUT I SHOULDN'T SIT HERE AND EXPECT SOMEHOW THAT I'M GOING TO SEE A HEADLINE OR FIND OUT ON MY OWN, I MIGHT SAY, THAT YOU GUYS ARE ACTUALLY GETTING SOLD?
ALBRECHT: WELL, I OBVIOUSLY WOULDN'T TELL YOU THAT ON THIS CALL. BUT I MEAN LOOK, ONE DAY LITERALLY I WOKE UP AND READ ALL OF THESE COMPANIES ARE INTERESTED IN BUYING STARZ. TWO DAYS LATER I SEE YOUR REPORT AND THEN I READ NO ONE IN THE WORLD IS INTERESTED IN BUYING STARZ.
FABER: THAT WAS JUST CBS. BUT OTHERS SAID NO ONE IN THE WORLD. YES.
ALBRECHT: AND THEN YOU KNOW, I DIDN'T KNOW ANY OF THOSE THINGS. I DIDN'T KNOW ALL OF THESE COMPANIES WERE INTERESTED AND I DIDN'T KNOW NOBODY IN THE WORLD WAS INTERESTED. AND I RUN THE COMPANY. SO YOU KNOW, THIS STUFF GETS SPUN. THAT'S ALL I CAN SAY.
FABER: IT DOES. ALRIGHT, WE WILL MOVE ON TO SOME OF THE STRATEGY. BUT I MEAN SOME OF THIS COMES FROM THIS IDEA I THINK, CHRIS, THAT YOU KNOW, STARZ IS NOT BIG. IT'S NOT SMALL, BUT MAYBE IT DOESN'T HAVE THE WHEREWITHAL TO COMPETE AGAINST THE NETFLIXS AND THE HBOS AND WHAT IS THIS INCREASINGLY COMPETITIVE MARKET FOR ORIGINAL PROGRAMMING. FOR EXAMPLE, "MARCO POLO." $90 MILLION. YOU GUYS HAD IT, I THINK, AT ONE POINT AND THEN IT WENT TO NETFLIX. SO THAT'S WHY PEOPLE THINK MAYBE THEY HAVE TO FIGURE SOMETHING ELSE OUT. CAN YOU COMPETE GIVEN THESE CAPEX NEEDS?
ALBRECHT: YEAH, ABSOLUTELY. LOOK, IT'S NOT A BINARY WORLD, YOU KNOW. MOST OF THE PEOPLE THAT HAVE PREMIUM HAVE NETFLIX. YOU KNOW, IT'S NOT AN EITHER/OR. MOST PEOPLE HAVE MORE THAN ONE PREMIUM. I THINK THE OPPORTUNITY FOR US IS THE OPPORTUNITY FOR OUR DISTRIBUTORS WHICH IS TO GET THESE HIGH VALUE PRODUCTS, THESE PREMIUM CHANNELS TO POTENTIAL CUSTOMERS, TO NEW CUSTOMERS, IN INNOVATIVE PACKAGING. THAT IS WHERE THE DISCUSSION OF SELLING THIS STUFF ON TOP OF BROADBAND COMES. BECAUSE IT'S NOT A QUESTION OF WHETHER THESE NEW CONSUMERS AND THE EMERGING HOUSEHOLDS OR CONSUMERS THAT ARE BEING MORE CHALLENEGED, BABY BOOMERS WHO ARE LIVING LONGER, IT IS NOT A QUESTION OF WHETHER THEY WILL BE CORD NEVERS. THEY WILL HAVE SOME HIGH-SPEED CONNECTION. IT IS A QUESTION OF WHETHER THEY WILL BE TRADITIONAL VIDEO BUNDLE NEVERS. AND THE BIGGEST IMPEDIMENT TO HAVING PREMIUM, TO GROWING PREMIUM HAS BEEN THE FACT THAT YOU'VE GOT TO BUY THROUGH THE ENTIRE VIDEO STACK TO GET TO PREMIUM. WELL, LESS PEOPLE ARE GOING TO BE ABLE TO DO THAT FINANCIALLY AND LESS PEOPLE ARE GOING TO BE WILLING TO DO THAT BECAUSE THEY ARE THE CONSUMERS THAT ARE COMING IN TECHNOLOGICALLY SAVVY. SO THE PRODUCTS THAT WE HAVE, WE HAVE THE CONTENT THAT THEY WANT, WE HAVE THE TECHNOLOGICAL PLATFORMS THAT THEY WANT.
FABER: I WANT YOU TO EXPLAIN WHAT THIS MEANS. BECAUSE I KNOW YOU HAVE SPOKEN ABOUT IT BEFORE. I'VE READ ABOUT IT. YOU MAKE THE POINT THERE'S 50 MILLION HOUSEHOLDS THAT HAVE BROADBRAND THAT DON'T HAVE PREMIUM.
ALBRECHT: YES.
FABER: WHICH YOU POINT OUT IS A REAL OPPORTUNITY. BUT I HEAR YOU HERE, AND I'M NOT UNDERSTANDING EXACTLY HOW YOU WOULD SATISFY THAT DEMAND. WHAT IS THE PRODUCT LOOK LIKE?
ALBRECHT: SO WE CAN'T SATISFY THAT DEMAND. WE HAVE TO HAVE OUR DISTRIBUTORS SATISFY THAT DEMAND. AND THEY HAVE TO BE WILLING TO DO IT. AND OBVIOUSLY, YOU KNOW, THEY HAVE A LOT OF THINGS ON THEIR MIND. BUT CERTAINLY, YOU WOULD THINK THAT CREATING A GROWTH BUSINESS WITH EMERGING HOUSEHOLDS WOULD BE THAT. SO ONE OF THE WAYS THAT I THINK THEY ARE GOING TO DO THAT, AND ONE OF THE WAYS THAT THEY TALK ABOUT DOING IT, AND ONE OF THE WAYS THEY ARE EXPERIMENTING DOING IT IS SELLING VIDEO ON TOP OF BROADBAND. BECAUSE THEY CAN INNOVATE THAT WAY AS OPPOSED TO THE RESTRICTIONS THAT THEY HAVE IN THE VIDEO STACK.
FABER: RIGHT. BUT DOESN'T THAT CANNIBALIZE THE OLD BUSINESS? DOESN'T THAT CANNIBALIZE THE VIDEO BUSINESS?
ALBRECHT: WELL, IT COULD BE LOOKED AT THAT WAY OR YOU COULD SAY WHAT IT'S DOING IS IT IS BUILDING LONG-TERM SUSTAINABILITY FOR YOUR VIDEO BUSINESS. SO, AGAIN, IT'S NOT BINARY. BUT IF YOU ARE GOING TO LOSE A VIDEO SUBSCRIBER, WOULDN'T YOU RATHER KEEP A VIDEO SUBSCRIBER IN AN INNOVATE PACKAGE? ESPECIALLY SINCE FOR THE CABLE GUYS AND I ASSUME THE TELCO GUYS AT SOME POINT, HIGH SPEED BECOMES THEIR MAIN BUSINESS. SO THE WAY TO CEMENT HIGH SPEED IN IS FOR THEM. I MEAN YES, THEY COULD HAVE NETFLIX BE WATCHED OVER THEIR HIGH SPEED. BUT FOR THEM TO REALLY MONETIZE THAT CONNECTION BEYOND WHATEVER THEY ARE CHARGING FOR THE CONNECTION IS TO SELL VIDEO. AND STARZ IS ONE OF THE HIGHEST MARGIN PRODUCTS FOR THEM IN THE VIDEO CATEGORY SO WHY NOT TRY AND GET IT TO AS MANY PEOPLE AS YOU CAN AND AS MANY INNOVATORS AS YOU CAN?
FABER: HOW FAR AWAY ARE WE FROM A WORLD LIKE THAT THAT YOU ARE DESCRIBING?
ALBRECHT: AS SOON AS THEY MAKE THE DECISION, IT CAN HAPPEN. THIS IS A QUESTION YOU SHOULD BE ASKING BRIAN ROBERTS, IT IS A QUESTION YOU SHOULD BE ASKING TOM RUTLEDGE.
FABER: YEAH, BUT IT IS A CONSEQUENTIAL DECISION. WHEN YOU ASK THE QUESTION, WHAT IS THE ANSWER?
ALBRECHT: YOU KNOW, THE ANSWER IS VARIOUS. FROM, YOU KNOW WHAT, IT'S A GOOD IDEA, WE ARE THINKING ABOUT IT, TO LITERALLY, I HAVEN'T THOUGHT ABOUT THAT. BUT THEY WILL HAVE TO THINK ABOUT IT. AND I THINK WHEN HBO TALKS ABOUT IT, WHEN LES TALKS ABOUT IT, WHEN STARZ TALKS ABOUT IT, IT'S OUT THERE. YOU GUYS ARE ASKING ABOUT IT. IT GETS MISINTERPRETED.
FABER: ERKIN IS DOING IT THOUGH, RIGHT? HE'S THE ONE. HE DID PUT SOMETHING TOGETHER. IT HASN'T ROLLED OUT YET.
ALBRECHT: SO THAT'S THE OTHER THING THAT IS GOING TO HAPPEN PROBABLY. WHICH IS THAT SOME OF THESE OPERATORS ARE GOING TO LOOK TO GO, "OVER THE TOP" EITHER WITHIN THEIR OWN BACKYARD OR OVER THE TOP IN SOMEBODY ELSE'S BACKYARD. THERE ARE NEW DISTRIBUTORS THAT ARE LOOKING TO COME IN. SONY'S GOT A DIGITAL DISTRIBUTION PLATFORM THAT THEY ARE TALKING TO A LOT OF PEOPLE ABOUT. SO I THINK FOR PREMIUM CHANNELS IN PARTICULAR, THE MORE WAYS THAT ALL OF THESE COMPANIES ARE TRYING TO GET PRODUCTS TO CONSUMERS IS GOOD FOR US. BECAUSE WE ARE THE PRODUCTS THAT PEOPLE WANT. SO AS THEY INNOVATE IN PACKAGING AS THEY INNOVATE IN DISTRIBUTION, WE ARE GOING TO HAVE MORE OPPORTUNITY TO GET MORE SUBSCRIBERS.
FABER: CHRIS, I'M TOLD WE ARE OUT OF TIME. AND I WAS JUST GETTING STARTED.
ALBRECHT: SORRY.
FABER: YEAH, ME, TOO. BUT I HOPE YOU JOIN US AGAIN SOON.
ALBRECHT: THANK YOU.
FABER: CHRIS ALBRECHT CEO OF STARZ.
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