Disney-Fox deal shunts talks between studios and theater chains
over so-called PVOD
By Ben Fritz
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (February 15, 2018).
Hollywood's push to offer movies at home sooner for a premium
price has become a casualty of Walt Disney Co.'s deal to acquire
most of 21st Century Fox Inc.
There are currently no talks happening between the main
proponents of so-called premium video on demand, including Comcast
Corp.'s Universal Pictures and Time Warner Inc.'s Warner Bros., and
major theater chains, according to people with knowledge of the
fizzled discussions.
That is because the Twentieth Century Fox movie studio was also
a key backer of the move, while Disney is not. Since deal talks
between those two companies became serious this past fall, Fox has
withdrawn from the discussions, the people said.
Disney in December agreed to buy key parts of Fox for $52.4
billion.
Currently, major studio movies are available to purchase online
no fewer than 75 days after they premiere in theaters, and to rent
or buy on disc two weeks later. The lag period has been shrinking
in recent years, but theaters believe a significant "window" of
exclusivity is critical to keep people buying tickets.
Many Hollywood executives, however, believe that practice isn't
in keeping with the emerging world of on-demand digital
entertainment and that the result is increased piracy and a
long-term decline in studios' economic fortunes.
Making movies available sooner to watch at home, even at a high
price, would relate better to current consumer behavior, executives
have argued.
PVOD, as the concept is known, would provide an urgently needed
new revenue stream at a time when the biggest global blockbusters
continue to deliver profits but other types of movies are
struggling.
Universal and Warner executives wanted many movies to be
available to rent digitally 17 days after they premiere in
theaters, while Fox was proposing 30 days, the people familiar with
the discussions said. Proposed prices ranged from $30 to $50, more
than five times the current cost of a video-on-demand rental. The
studios offered to share some of that revenue with theaters to
alleviate concerns about reduced ticket sales.
Because antitrust laws prevent studios from coordinating, each
studio separately discussed their proposals with theatrical
exhibitors. That has made coalescing around a single plan
complicated, people involved in the talks said. Even before Fox
pulled back, it wasn't certain a deal could be achieved.
Several digital and cable companies also have attempted to spur
premium video on demand. Apple Inc. was pushing a 30-day plan with
studios, one person with knowledge of the discussions said.
Disney has been the only major studio absent from the talks, and
that is because it produces fewer, bigger-budget titles than
competitors, which generate more on average at the box office than
rivals' releases.
For much of last year, it seemed likely that studios and
theaters would reach an agreement or that one studio would
unilaterally announce its intention and others would follow.
AMC Entertainment Holding Inc., the largest cinema chain in the
U.S. by number of locations, had been more open to PVOD than its
largest competitor, Regal Entertainment Group, one of the people
said.
AMC's chief financial officer said at an investor conference
last month that PVOD discussions had "lost momentum" but didn't
specify the reasons.
Disney and Fox had a combined 34% box-office market share in
2017, making it difficult for other studios to enact any plan
without them. In addition, Warner Bros. has been reluctant to take
the lead on a controversial issue as the company tries to keep its
head down amid government opposition to AT&T Inc.'s proposed
purchase of Time Warner.
Both AT&T and Comcast own distribution platforms that
distribute movies digitally, which could influence their stance on
PVOD.
Fox, as a pure content company, was viewed as the only
unconflicted leading proponent of PVOD. Its executive chairman,
Lachlan Murdoch, said at a September investor conference that the
current system of delays between theatrical and home release is
"highly inefficient" and that it "has to change."
21st Century Fox and Wall Street Journal parent News Corp share
common ownership.
Sony Corp.'s Sony Pictures Entertainment has been promoting its
own plan to move up digital and DVD sales by a couple of weeks in
an effort to combat the piracy that typically occurs after movies
have finished their theatrical runs, according to a person with
knowledge of the proposal.
However, that proposal, too, appears to have little momentum at
the moment, according to knowledgeable people.
Most top executives in Hollywood believe it is inevitable
consumers will get earlier access to movies at home but don't
expect any movement on the issue until the current wave of merger
deals is complete.
Write to Ben Fritz at ben.fritz@wsj.com
(END) Dow Jones Newswires
February 15, 2018 02:47 ET (07:47 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
Sony (NYSE:SONY)
Historical Stock Chart
From Aug 2024 to Sep 2024
Sony (NYSE:SONY)
Historical Stock Chart
From Sep 2023 to Sep 2024