Films to debut on TV before hitting theaters Carolco Pictures, cable firm team up

April 25, 1993|By Los Angeles Times

LOS ANGELES -- In a move that could lead to vast changes in the movie-going experience, the nation's largest cable TV operator has secured the rights to broadcast four blockbuster films before they hit theaters.

Tele-Communications Inc., the Denver-based cable operator that serves about 20 percent of the nation's 60 million cable households, said Friday that it would invest up to $90 million in Hollywood's Carolco Pictures Inc. in exchange for permission to help develop and transmit four movies on pay-per-view cable TV over the next four years.

For TCI, the Carolco deal represents another step in its carefully crafted plan to increase its hold over the programming carried on its network, and an attempt to generate public interest and acceptance of its expanding lineup of pay-per-view entertainment.

For Carolco, which produced the hit, "Terminator 2: Judgement Day," TCI's infusion helps assure the studio's financial stability, which was shaky until its partners and creditors agreed on a restructuring plan in December. Completion of the deal will depend on regulatory approval of that restructuring, the two companies said Friday.

Debuting theatrical movies on pay-per-view television isn't a new idea, although the TCI/Carolco venture is the most ambitious venture of its kind to date.

Universal Studios put "The Pirates of Penzance" on pay-per-view television in 1983 before the film played in theaters, but it attracted only a small audience. Executives at such industry giants as Time Warner and Fox Inc. have also considered having high-profile films debut on pay-per-view before they play in theaters.

Now, however, analysts say, similar deals are sure to follow.

"This obviously makes a tremendous amount of sense for cable operators and the studios," said Thomas F. Gillett, a cable television consultant in St. Louis.

The odd men out in the deal appear to be theater and video store operators, who fear that the pay-per-view broadcasts will cut into their businesses.

"Most theater owners feel that playing a picture after it has been on pay-per-view television would be equivalent to committing economic suicide," said William F. Kartozian, president of the National Association of Theater Owners trade group.

Analysts say the pay-per-view deal also poses a real threat to home video stores.

If pay-per-view becomes popular, they note, studios could reduce or even eliminate, the 30-day to 45-day distribution advantage that video stores currently have before movies are released to cable TV.

Of the $90 million TCI can invest in the deal, $50 million will go toward purchase of an unspecified amount of the studio's common stock.

The balance represents a nonrefundable fee for pre-theatrical, pay-per-view rights for four movies to be selected jointly by the companies.

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