Sid Sheinberg, president/CEO of MCA Inc., used a press conference ballyhooing the Tuesday start of the new pay-cable network Starz to attack HBO and Showtime for their “distressing” indifference to cutting movie deals with Universal.
After the formal Q&A with reporters linked up electronically in various cities throughout the U.S., Sheinberg said the attitude of HBO and Showtime to negoti-ating for the pay-cable rights to Universal pictures is: “You can’t help us — we don’t need your movies.”
That’s why seven months ago, Universal decided to thrust John Malone, president/CEO of Telecommunications Inc., into the pay-cable business.
U became the first major studio to agree to sell its new movies exclusively to the Malone-controlled Encore mini-pay channel, enabling it to launch Starz.
The new service’s goal is to initiate the first challenge to HBO and Showtime in more than 10 years.
Starz will carry new studio releases, while the 2-year-old Encore’s niche will be mostly non-exclusive films from the 1960s-1980s. Additionally, the company is slated to start six new specialty channels via video compression.
Sheinberg says Encore’s chairman/CEO John Sie, who owns 10% of the pay-cable operation (Malone’s Liberty Media owns the other 90%), didn’t convince Universal to go with Starz by offering higher license fees than HBO and Showtime.
In fact, sources say Universal’s deal is fairly standard. The studio probably will collect about $ 4 million per title, based on the industry average of one-third of the $ 12 million rental income for the average U theatrical.
The primary reason for siding with Starz, Sheinberg says, is that Sie has a “mission.” He’s marketing and packaging Starz in the context of the other pay channels.
Sie lumps the other six specialized minipay services under the umbrella term “thematic multiplex” and says that the Western, mystery and romance threesome — consisting mostly of movies and TV series from the ’60s, ’70s and ’80s — will be available in mid-1994.
The final three channels — action-adventure, true stories/drama and teen-oriented product that are also drawn from the same inventory — will kick in by the end of 1994.
Initially, Encore is offering Starz only to 9 million subscribers of TCI systems, 3 million of which pony up about $ 1.50 a month for Encore.
TCI will ask these subscribers to buy Starz with Encore on a two-channel tier for $ 4.50 a month. When all eight channels become available on one massive tier to subscribers on systems with the channel capacity to transmit them, Sie says he’ll suggest a retail price for the tier of $ 12 a month.
Among the movies scheduled on Starz this year are such Universal titles as “Scent of a Woman,””Lorenzo’s Oil,””Jungle Fever,””Dragon: The Bruce Lee Story, “”Carlito’s Way,””Beethoven’s 2nd” and “In the Name of the Father.”
The $ 1 billion-plus movie-output deal Encore struck four months ago with Walt Disney’s Touchstone and Hollywood Pictures for Starz won’t kick in until 1997, when Disney’s current Showtime agreement expires.
But Starz will start getting access to pix distributed by Disney’s wholly owned subsidiary Miramax, including “The Crying Game,””Reservoir Dogs,””Passion Fish,””Like Water for Chocolate” and “The Piano.” Miramax co-chair Harvey Weinstein spoke at the news conference.
Movies from New Line and Carolco are also in the hopper, but, based on a previous deal, Showtime has the lock on this year’s batch of New Line movies. Starz won’t begin scheduling New Line movies until 1995 with “House Party 3.” Bob Shaye, chairman/CEO of New Line, also spoke briefly at the news conference. Sie made no mention of any Carolco titles, and no Carolco exec participated in the session.
A big minus for Starz is that “Jurassic Park” is not part of the Universal deal because Steven Spielberg controls the aftermarket rights, as he does with “Schindler’s List.” Also not part of the deal are Imagine Entertainment movies that U just distributes, like the forthcoming “The Paper,” starring Michael Keaton and Glenn Close and directed by Ron Howard. Showtime has an output deal with Imagine.
Sources say “Jurassic Park,” like Spielberg’s “E.T.: The Extra-Terrestrial,” probably will bypass pay cable and end up in a few years on a broadcast network with Sears as the sponsor. But Sie says that if “Schindler’s List” eventually winds up on pay cable, “We’re going to get it.”