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This news just broke at 4:40 p.m., eastern time, Wednesday. Starz Entertainment (LSTZA) will no longer discuss contract renewal with Netflix (NASDAQ:NFLX). Once the current agreement between the two companies ends on February 28, 2012, it's all over. Netflix will no longer be able to stream Liberty Starz content. Here's the rationale from the LSTZA press release:

This decision is a result of our strategy to protect the premium nature of our brand by preserving the appropriate pricing and packaging of our exclusive and highly valuable content. With our current studio rights and growing original programming presence, the network is in an excellent position to evaluate new opportunities and expand its overall business.

Over the months, I have taken quite a bit of heat while making the short case against Netflix. One angle I have pounded home is that the studios had concerns that the Netflix model dilutes their content. Liberty Starz's move today simply reinforces the points I have made on several occasions.

From late July:

Despite that NFLX post-Pendola article run, mid-June might go down in the history books, alongside the demise of Webvan, as when things clearly started to go south for Netflix, the company, not the stock. It was around that time when Netflix announced Sony (SNE) abruptly pulled its content from Netflix's streaming service due to terms in its agreement with Starz (LSTZA).

In another case of what Netflix management says being several guitar riffs from reality, the removal has proven to be anything but "temporary." Temporary means a few days, maybe a few weeks to most people I run with.

While the company refuses to confirm anything, the removal likely had something to do with the number of streaming customers who were able to view Sony content, prompting Sony to want more money from Starz to ease the sting of what Netflix does so well -- dilute the studios' content.

And from mid-August:

And herein lies the rub for Netflix. Its spat with Starz (LSTZA) and Sony (NYSE:SNE) only reinforces Iger's point. The "temporary removal" of Sony content from Netflix streaming has everything to do with dilution of content. Even after its price hike, Netflix effectively gives away the programmers' legacies -- and blood, sweat and tears -- in exchange for a quick buck.

The programmers clearly recognize that they must balance the potential long-term damage of dilution with the need for near-term revenue boosts. And that's exactly why the programmers are only willing to part with the leftovers that no longer command big bucks from advertisers.

To make matters worse, this is Netflix's core business. It has nothing else. It's in the business of bringing old, stale television programs and movies to people willing to ignore the relatively insignificant recurring charge on their credit cards.

This article from even earlier, back in June, chronicles the beginning of the end.

What is even more curious about the Liberty Starz announcement is the timing. Netflix's new pricing model took effect today. I can't help but think that Starz waited until today to make the announcement out of some sort of bad blood, not necessarily directly spewed toward Netflix, but toward the whole notion of a middle man -- a mere glorified bootlegger -- diluting content that it can host on its own, via its own premium traditional and digital platforms.

It's all over. If you're a bear this is what you've been waiting for. Cue up all of the Johnny-come-lately analysts who will now riff about Netflix's demise. The writing's been on the wall for months.

There has never been room for what Netflix does. And aside from collecting a quick buck to pad the bottom line there has never been a good reason for studios to license content to Netflix.

As the many TV Everywhere initiatives prove, programmers can do what Netflix does on their own, while protecting the integrity and quality of their content. And once they figure out an advertising and susbcription structure that works, programmers -- and maybe even cable and satellite operaters -- will make the billions Netflix is on the hook for look like chump change.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Additional disclosure: I may open and close long and short positions, often using options, in any of the stocks mentioned in this article at any time.
Source: Netflix On Last Legs? It's All But Official