Starz and Netflix parting ways

Pay-TV channel Starz has called off talks to renew its streaming deal with Netflix, in a move that could deprive the online video service of one of its key sources of movies.

Starz has original programming but also distribution rights for movies from studios such as Disney and Sony.

Although Netflix has brokered several deals over the past year with other content companies, the decision by Starz means Netflix will no longer be able to offer newer movies such as Toy Story 3 and others from the studios of Walt Disney and Sony, the two major studios with which Starz has distribution rights. The current deal is set to expire on February 29th 2012.

Netflix shares fell about 9 per cent at $213.55 in after-hours trading, after Starz made its announcement.