CBS Inc. and 20th Century Fox Film Corp. are renegotiating their home video joint venture to reduce the network's involvement in the 8-year-old partnership, executives at both companies said this week.
The TV network and film studio are 50-50 owners in CBS/Fox Inc., which distributes videocassettes of Fox films and some CBS programs.
But in recent years, CBS has contributed significantly less product than Fox into the joint venture. When the partnership was formed in 1982, the network operated a division that produced theatrical films, but this was later disbanded.
Recently, the network's contribution to the joint venture has been largely limited to news and sports programs, which are not big sellers in the home video market.
CBS/Fox had revenue of about $249 million in 1990 and controls 6.5% of the home video market, according to the media research firm Paul Kagan Associates. The majority of revenue came from rental of such Fox titles as "The War of the Roses" and "The Abyss" and ongoing home video sales from the "Star Wars" series of movies.
"The joint venture has an automatic termination date, which is very soon," said Barry Diller, chairman of 20th Century Fox. "The partners are discussing their options." He declined to elaborate.
Several Wall Street analysts and industry executives said, however, that they expect CBS to pull out or reduce its interest in the joint venture.
"There is very little reason for them to remain in it," said Dennis McAlpine, an analyst at Barclays de Zoete Wedd in New York. "It's not a big deal for CBS at this stage, and I would think Fox probably wants it on its own."
A couple of years ago, the joint venture was renegotiated to reflect more accurately the contributions of each partner. CBS and Fox now take out much of their profits in the form of royalties for the titles they own. Profits are split evenly on all titles that they jointly buy for the partnership.
In the future, executives said, Fox will have more control over its own titles than it does under the current partnership agreement. In addition, they said, the partnership will continue to acquire titles for the library from third parties.