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Time Warner Cable Inc. (TWC - Analyst Report), the second-largest cable MSO (multi service operator) in the U.S., has tied up with Starz (STRZA - Snapshot Report) to offer the latter’s online offerings STARZ PLAY and ENCORE PLAY.

Time Warner Cable customers who subscribe to STARZ and ENCORE can avail the services for free. Customers can enjoy unlimited online access to more than 1,000 monthly title and can also enjoy the service via Android and iOS apps.

The agreement will let the cable MSO customers to watch on-demand movies at no additional cost. Subscribers can also enjoy the online service through website by simply verifying their subscription with the Time Warner Cable ID.  

Starz, which was formed by spinning off from Liberty Media Corp (LMCA - Analyst Report), currently has 17 cable television channels and serves 56 million U.S. customers. Both STARZ and ENCORE, through their online format, offer 14 pay-TV channels that air more than 600 movies. Additionally, both STARZ and ENCORE offers several Original series, including the very popular Mega City.

The partnership with Starz enhances the reach of Time Warner Cable’s TV Everywhere offering, which allows the U.S. customers to watch their favourite shows and movies from anywhere and on any platform. Recently, the company tied up with Scripps Networks Interactive Inc. (SNI - Analyst Report) that will bring the latter’s popular lifestyle cable channels on Time Warner Cable’s TV Everywhere platform.

Cable MSOs in the U.S. are facing fierce competition from telecom carriers and online video streaming companies, who provide extremely cheap sources of TV programming. This has significantly impacted Time Warner Cable’s Residential Video business. In the recently concluded first quarter, the company lost 119,000 Residential Video subscribers.

We believe that bringing these popular channels will increase the content base of TV Everywhere, thus vending off competition from online streaming companies. Furthermore, it will reduce the constant decline in subscriber base within the Residential Video business.  

TWC currently carries a Zacks Rank #3 (Hold).

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