DirecTV Video Plan May Revive Hollywood, Cinema Clash

DirecTV (DTV)’s plan to offer movies as soon as a month after the theatrical debut is setting the stage for a renewed confrontation between Hollywood studios such as News Corp.’s Fox and cinema owners.

Regal Entertainment Group (RGC), the largest U.S. exhibitor, is among theater chains that said yesterday they oppose showing movies on pay-television four to six weeks after their release.

DirecTV, the largest satellite pay-TV service, said last week it’s talking with studios about video-on-demand offerings within the earlier window. The initial price being discussed is $30 for a one-night rental, said a person with knowledge of the talks.

The plan, aimed at offsetting sales lost to a decline in DVD revenue, risks reigniting a conflict similar to the one that erupted last year, when Walt Disney Co. (DIS) decided to release “Alice in Wonderland” on DVD in Europe 13 weeks after its theatrical open -- four weeks sooner than typical. Exhibitors complained before ultimately agreeing to show the movie.

Theater chains are again balking as studios now consider a premium video-on-demand release that would shrink the amount of time theaters have exclusive access to new releases even further.

Regal, based in Knoxville, Tennessee, won’t provide screen time to movies that studios plan to market on pay TV four to six weeks after release, Chief Executive Officer Amy Miles said in an e-mail. Studios haven’t mentioned that time frame in discussions with the chain, she said.

Marketing Buzz

A theatrical run is the best way to set a movie up for successful home-video sales, Alan Stock, chief executive officer of Plano, Texas-based Cinemark USA Inc., the third-largest chain, said in an e-mailed statement. He stopped short of refusing to show movies scheduled for earlier VOD showings.

“The excitement or marketing buzz created by the successful theatrical release of a film has and will continue to be in the future the one matrix that guarantees a film’s success in the auxiliary in-home window platforms,” Stock said.

DirecTV is working with Sony Corp. (6758), Fox and Time Warner Inc. (TWX)’s Warner Bros. and is seeking to start service by June, the Los Angeles Times reported earlier.

Gerry Lopez, chief executive of Kansas City, Missouri-based AMC Entertainment Inc., owner of the second-largest chain, told the newspaper that his theaters also would not show films scheduled for such an early VOD run.

“We’re very, very bullish on the opportunity that we see with movies,” El Segundo, California-based DirecTV’s CEO, Michael White, said on a Feb. 23 conference call. “I expect you’ll see some trials this year with some of the studios, probably around midyear, I would guess, where perhaps we’ll try something that’s four weeks or six weeks from theatrical release.”

In Demand

No agreements have been reached, DirecTV spokesman Robert Mercer said yesterday in an e-mail response to a question.

Home video sales and rentals fell 3.1 percent to $18.8 billion last year, the sixth straight drop, according to the industry’s Digital Entertainment Group.

News Corp. (NWSA) President Chase Carey said on a Feb. 2 conference call that the company is considering a 60-day window for video-on-demand release.

Julie Henderson, a spokeswoman for Los Angeles-based Fox, declined to comment, as did Paul McGuire, a spokesman for Warner Bros.

A partnership of cable systems including Comcast Corp. (CMCSA) and Time Warner Cable, was in talks with Sony Pictures, Warner Bros. and Burbank, California-based Disney to offer films for as much as $30 a showing soon after they run in theaters, Bob Benya, CEO of the In Demand venture, said in September.

DirecTV rose 87 cents to $46.26 at 4 p.m. in New York Stock Exchange composite trading and has gained 16 percent this year. Regal fell 4 cents to $14.29. The stock has fallen 5.6 percent in the past 12 months. News Corp. rose 28 cents to $17.64 on the Nasdaq Stock Market and has gained 29 percent.

To contact the reporter on this story: Michael White in Los Angeles at mwhite8@bloomberg.net

To contact the editor responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net

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