As expected, Orion Home Video has inked an agreement with McDonald’s for the fast-food chain to distribute “Dances With Wolves” at $ 7.99 with food purchase (Daily Variety, Aug. 12). Deal was announced yesterday.

McDonald’s also will offer Orion’s “Dirty Rotten Scoundrels” and “Babes in Toyland” (with Richard Mulligan, Keanu Reeves and Drew Barrymore) for $ 5.99 with food purchase. The special offer goes into effect Nov. 27.

Officially, Orion exex would not comment on the deal and McDonald’s officials could not be reached on Friday. But an Orion source suggested the deal calls for McDonald’s to purchase at least 2 million cassettes from Orion.

It’s believed the agreement could be worth around $ 10 million to Orion, which recently emerged from Chapter 11 bankruptcy protection. The McDonald’s deal was reflected in cash-flow projections in disclosure documents from Orion.

According to a well-placed source, McDonald’s advertising will tout the movie offer during the tapes’ availability, and the value of that advertising is greater than $ 30 million (including costs for in-store materials).

The fast-food giant used a similar strategy last year, offering Paramount’s three “Indiana Jones” pix on cassette at a promotional price. Sources say McDonald’s bought close to 5 million of those cassettes.

The cassettes of “Dances,””Scoundrels” and “Babes” are being manufactured in the standard play mode, but not by Orion’s usual duplicator (and major creditor) Premiere. A major reason the tapes will be dubbed elsewhere, according to the well-placed source, is duplication capacity.

To avoid the problem of defective cassettes OHV experienced when “Dances” was released to the vid rental market, the manufacturing process has been modified.

When rumors of the OHV/McDonald’s deal first surfaced, some vidstore owners denounced Orion for giving the fast-food chain first crack at “Dances” for sell-through. They said the McDonald’s sales would be lost sales for vidstores.

On Friday, the Orion source commented, “There have been plenty of comments from a vocal minority. The deal we did is intrinsic to our strategic plan. The cash flow is necessary to our financial strength. In simplest terms, the alternative is the loss of the studio and constricted market concentration.”

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