DirecTV Starts Premium Film Rentals at $29.99 for 48 Hours

DirecTV, the largest satellite-TV operator, will offer a 48-hour rental of Sony Corp. (6758)’s “Just Go With It” for $29.99 just 10 weeks after the movie’s theatrical release in the first such service on pay television.

Universal Pictures, Warner Bros. and Twentieth Century Fox will also supply films to the service two months after their theatrical release, Jade Ekstedt, a spokeswoman for El Segundo, California-based DirecTV said today in an interview.

Studios, which are looking to pay-TV to find new ways to sell movies and counter shrinking DVD sales, risk alienating cinema operators such as AMC Entertainment Inc. that have criticized plans to offer new films so quickly in homes. Regency Theatres, based in Calabasas, California, will pull “Just Go With It” from its second-run theaters, where it was among the top two titles last weekend, said President Lyndon Golin.

“We don’t want to show movies that are on TV,” Golin said in a telephone interview. “We want to protect the movie-going experience.”

DirecTV (DTV) customers, the first to gain access to the premium offering, will have two weeks to order the movie before it’s replaced by another title, Ekstedt said. “Just Go With It” was still in 326 theaters last weekend, according to Box Office Mojo, an industry website.

Photographer: Matthew Staver/Bloomberg

A DirecTV dish receiver sits on the roof of a home in Denver. Close

A DirecTV dish receiver sits on the roof of a home in Denver.

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Photographer: Matthew Staver/Bloomberg

A DirecTV dish receiver sits on the roof of a home in Denver.

“Working on an earlier delivery window at a premium price makes sense” Rich Greenfield, an analyst at BTIG LLC in New York, said in an interview. The $30 price may be too high, he said, calling the effort a worthwhile risk in spite of angering some cinema operators.

Maximizing Profit

“The studios are looking to maximize profitability, not keeping all their friends happy all the time,” Greenfield said.

Sun Dee Larson, a spokeswoman for Kansas City, Missouri- based AMC, didn’t respond to an e-mail seeking comment. Regal Entertainment Group (RGC), the largest exhibitor, also didn’t respond.

“Just Go With It,” a comedy featuring Adam Sandler and Jennifer Aniston, was released on Feb. 11 and has taken in $102.3 million in U.S. theaters, according to Box Office Mojo.

Regency, which operates in Southern California and Las Vegas, started showing the movie in second-run locations last weekend, Golin said. He said his company, part of the National Association of theater owners, hasn’t spoken directly with Sony.

“It’s very substantial for us,” Golin said. “Will our little company make a difference to Sony? Probably not.”

AMC, the second-largest exhibitor behind Knoxville, Tennessee-based Regal, is seeking a bigger share of the box- office split with studios to compensate for the expected loss of sales, said David Joyce, an analyst at Miller Tabak & Co. in New York.

Cannibalization Fears

“It remains to be seen whether there would be cannibalization of the initial box office releases,” Joyce said in an e-mail. “There would be plenty of ripple effects. Studios get paid from the premium movie channels typically based on box office performance.”

DirecTV gained 25 cents to $46.10 at 4 p.m. New York time in Nasdaq Stock Market trading. The shares have gained 15 percent this year. U.S. shares of Tokyo-based Sony rose 46 cents to $29.71 on the New York Stock Exchange.

In the next few months, DirecTV will offer “The Adjustment Bureau” from Comcast Corp. (CMCSA)’s Universal Pictures, “Cedar Rapids” from News Corp. (NWSA)’s Twentieth Century Fox and “Hall Pass” from Time Warner Inc. (TWX)’s Warner Bros., Ekstedt said. All three are still in cinemas, according to Box Office Mojo.

The service will be available only to DirecTV customers with high-definition tuners equipped with digital video recorders, Ekstedt said. Once purchased, the films will begin playing immediately in full HD and surround sound.

To contact the reporter on this story: Andy Fixmer in Los Angeles at afixmer@bloomberg.net

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

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