Breaking ranks with the other major Hollywood studios, Vivendi Universal has struck a long-term agreement to license its movies to cable operators for new video-on-demand services that are considered the next big growth opportunity for the cable industry.
Vivendi acknowledged late Thursday that it has signed a deal with In Demand, a cable programming distributor that is owned by four of the nation's top cable operators: AT&T Broadband, AOL Time Warner Inc., Comcast Corp. and Cox Communications Inc.
FOR THE RECORD
Los Angeles Times Tuesday July 24, 2001 Home Edition Part A Part A Page 2 A2 Desk 2 inches; 57 words Type of Material: Correction
Movie deal--An article in the Business Section on Friday about Vivendi Universal's agreement to provide movies to cable operators incorrectly reported that the films would be released to pay-per-view and video-on-demand services at the same time they are available to networks such as HBO. The movies would be available to pay-per-view and video-on-demand services before they appear on cable networks.
The companies are expected to announce the deal today.
The agreement could kick-start movies-on-demand services that cable operators have been slow to deploy without rights to big movies. These services allow cable subscribers to order movies whenever they want by the click of a remote control, instead of having to drive to the video store or wait for one of the prescribed start times on a pay-per-view movie channel.
Current releases, however, still won't turn up on television until well after they are available at video rental outlets.
Although cable operators have been pushing to get releases at the same time as video stores, Hollywood has been unwilling to budge, afraid of cannibalizing its biggest source of revenue: Blockbuster Inc. Vivendi Universal held the line as well, releasing new movies to In Demand for video-on-demand services 45 to 60 days after their availability for rental, according to sources close to the negotiations.
That is the same time that feature films are available on HBO, Showtime, Starz or pay-per-view channels.
Neither In Demand nor its owners would comment Thursday.
Vivendi broke a yearlong stalemate, seizing an opportunity to extract favorable terms from cable operators for being first among the major studios to sign a long-term deal. Two sources involved in the negotiations said the company received a signing bonus, estimated at less than $5 million.
Under the deal, Vivendi will receive about 60% of the revenues cable operators collect from customers who order the studios' titles. That is less than the 70% that studios have been demanding but more than the 50% they now receive from operators for pay-per-view movies.
Cable industry sources said the deal will give Wall Street comfort that cable operators will roll out these services on the schedule they have promised.
