Time Warner Said to Pay at Least $80 Million for Flixster

Time Warner Inc. (TWX)’s Warner Bros. division is paying about $80 million for the Flixster movie application and related Rotten Tomatoes website, according to three people with knowledge of the transaction.

As part of the deal, Time Warner may pay an additional $20 million in bonuses aimed at retaining Flixster Inc.’s top executives, said the people, who asked not to be named because the terms of the deal weren’t made public when it was announced yesterday.

The acquisition is intended to give Time Warner customers a place to store the digital movies or TV shows they buy or rent. The sites would be part of Warner’s “Digital Everywhere” application that lets consumers store content and view it on devices connected through the UltraViolet format endorsed by several studios, the company said yesterday in a statement.

Time Warner plans to make more acquisitions as it expands its digital delivery and marketing ability, Kevin Tsujihara, president of Burbank, California-based Warner Bros. Home Entertainment Group, said in an interview.

“There is a sense of urgency about helping the consumer to transition to digital,” he said. “This will not be the last announcement that we make.”

Time Warner, which is based in New York, fell $1.24 to $36.49 yesterday in New York Stock Exchange trading. The shares have gained 13 percent this year.

Photographer: Jonathan Alcorn/Bloomberg

Kevin Tsujihara, president of Warner Bros. Home Entertainment Group, attends the National Cable and Telecommunications Association (NCTA) 2010 Cable Show in Los Angeles, California, U.S., on Tuesday, May 11, 2010. The show runs until May 13. Close

Kevin Tsujihara, president of Warner Bros. Home Entertainment Group, attends the... Read More

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Photographer: Jonathan Alcorn/Bloomberg

Kevin Tsujihara, president of Warner Bros. Home Entertainment Group, attends the National Cable and Telecommunications Association (NCTA) 2010 Cable Show in Los Angeles, California, U.S., on Tuesday, May 11, 2010. The show runs until May 13.

Tsujihara wouldn’t comment on specific deals Warner might consider and said the acquisition of Flixster and Rotten Tomatoes could eventually be linked with an online-rental service on Facebook Inc.’s site that it introduced in March.

Netflix Rival?

That service, which offers movies including “The Dark Knight” and “Inception,” could give Warner a potential competitor to Netflix Inc. (NFLX), he said in response to a question, although he added that “there will always be a place for Netflix.”

Joe Greenstein, co-founder and chief executive officer of San Francisco-based Flixster, declined to comment on the terms of the acquisition. Tsujihara also declined to comment on the terms of the deal.

Flixster, which provides movie information and social networking on Android, BlackBerry and iPad devices, is downloaded more than 25 million times a month. It also provides limited free online movie viewing. Rotten Tomatoes, meanwhile, offers movie reviews and other film information to more than 12 million unique users a month.

Warner Bros. will be able to market its films through the social-networking capabilities of both Flixster and Rotten Tomatoes, Tsujihara said.

“The thing that we have to do is to take the guesswork out of buying and watching digital content,” he said. “You don’t want a consumer to buy a digital copy of a movie and find that it doesn’t work on an iPad.”

To contact the reporters on this story: Ronald Grover in Los Angeles at rgrover5@bloomberg.net; Douglas MacMillan in San Francisco at Dmacmillan3@bloomberg.net

To contact the editors responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net; Tom Giles at tgiles@bloomberg.net

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