Deal seeks pay-per-view before movie's premiere

April 23, 1993|By Bloomberg Business News

DENVER -- Some day, audiences might stay home to watch movie premieres. For now, though, analysts expect moviegoers to do just that: go to the movies.

Tele-Communications Inc. is negotiating to make a $90 million investment in ailing Carolco Pictures Inc. in return for rights to show the studio's movies on pay-per-view on the same day or before they are released in theaters, according to the Wall Street Journal. Tele-Communications owns a 50 percent stake in Reiss Media Enterprises Inc., a pay-per-view company. Both companies declined to comment.

Analysts said such an agreement, if it comes to pass, would be an isolated case made possible by Carolco's desperate financial situation. The studio has teetered on bankruptcy for some time. Already, four other investors have sunk about $200 million into the studio, including Metro-Goldwyn-Mayer Inc.

dTC If the agreement between Tele-Communications, the largest U.S. cable company, and Carolco does occur, Hollywood's other studios aren't expected to join in step.

There are risks involved in showing movies to a home audience before a theatrical release, among them hurting home-video sales, which account for more of a studio's profits than box-office sales. And the problem of copying pay-per-view events on video tapes hasn't yet been solved.

"It would be foolish for the studios at this point," said one analyst.

It would ruffle the feathers of theater owners, who receive about 50 percent of a film's box-office revenue.

"They would certainly retaliate to some degree," said Alan Gould, an entertainment analyst with Kidder, Peabody & Co. For example, if a film is shown on pay-per-view prior to the big screen, theater owners will have an instant measure of its appeal. And if it bombs, they could pass it over.

While Carolco has had its financial problems, it has managed to make some highly successful movies in recent years, including "Basic Instinct" and "Terminator 2: Judgement Day."

It is these type of big-budget movies that would be suitable for pay-per-view, since they could command large audiences. There doubt whether directors would want their films to debut on television. "Steven Spielberg isn't in the business of making movies for the small screen," said Mr. Gould.

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