Warner Bros. Intl. Television Distribution has clinched its most lucrative deal in Europe, sources say.
With an official press release in the final draft stage, Germany’s top-rated commercial network, RTL, has wrested control of current and future Warner product from its chief rival and Europe’s most powerful film rights dealer, Leo Kirch.
The landmark agreement will critically shift the balance of media power in Germany and ratchet up expectations from all Hollywood majors renegotiating deals here.
For a pricetag of $240 million, RTL exclusively will retain free TV rights for the next five years to 46 Warner Bros, feature film releases from 1993-95, including “Batman Forever,” “Disclosure,” “The Firm,” “Dennis the Menace” and the Harrison Ford starrer “The Fugitive.”
The package also includes 75 TV movies, 100 series, and 60 specials – in all 500 hours of new TV product for the next three seasons, according to RTL managing director Helmut Thoma. Upcoming fall network shows such as “Charlie Grace,” “Bless This House,” and “Two Something” are among the licensed shows.
Other sources tell Variety the package also contains back catalog titles in the form of black-and-white series from the 1950s such as the adventures of “Bomba,” the jungle boy.
Sources say the deal with Warners closed over the weekend, despite the fact that RTL’s majority shareholders Bertelsmann and European broadcast group CLT Multi Media originally groaned over price and conditions.
Warner Bros. Intl. Television Distribution president Jeffrey Schlesinger was traveling and unavailable for comment late last week.
The pricetag on the Warner deal is considered high by German media observers. A consortium of Germany’s well-funded pubcasters, ARD and ZDF, dropped out of the bidding at the $150 million level. Kirch is said to have thrown in the towel when the bidding exceeded $200 million.
The sale is an important trophy for Schlesinger, whose predecessor at WBITD, Michael J. Solomon, is said to have done a billion dollars in business with the Kirch Group during his approximate 12-year tenure at WBITD and before that at Lorimar Telepictures.
But $240 million is a tick lower than the deal might have closed at, with insiders saying it stood at one point as high as $268 million. A key to paying such a hefty price is the ability to move a good chunk of the product on the secondary market, once RTL picks prime fare.
One possible hangup is a restrictive sub-licensing clause which only allowed RTL to sublicense unwanted or excess material to channels where its shareholders also held an equity stake, like RTL-2 and Vox, but not to rival webs like ARD, ZDF or Sat-1. It is not clear how that issue has been settled.
In Hollywood, the deal sets a new high-water mark for studios such as Paramount and 20th Century Fox, which will be re-negotiating output deals in Germany within the next 12 months. MCA TV Intl. and Columbia TriStar TV Intl. have output deals with RTL, and are also expected to demand steeper fees when negotiations for those deals eventually come up.
The Warners deal brings home the point that lucrative deals can be signed in Germany without tying up product for extended periods of time – a formula of the past which often made life difficult for the studios’ corporate parents when it came to freeing up programming for channel development.
Until now, Warner product repeatedly has been licensed to Kirch, whose control of TV rights to film and TV shows gives him enormous leverage in the German market. For the first time, Warner several months ago asked Germany’s other players to submit bids after the studio had concluded a round of private negotiations with Kirch. A wild, summerlong auction ensued.
Kirch Group managing director Gottfried Zmeck declined to discuss the deal between Warners and RTL specifically, but he reaffirmed that film rights remain the Kirch Group’s core business. He added that everything has its price and “sometimes it’s not worth it.”
While Hollywood may be rubbing its palms over the new booty, local players see undesirable effects for the industry.
“The damage is that the ratio of acquired programming to local production has reached an unprecedented level,” said Herbert Kloiber, chief executive and half-owner of producer/distribbery TeleMuenchen.
More importantly, the deal swings the balance of power, as determined by who controls the rights to U.S. fare. Until now, the man who has dominated in that area is Kirch, who owns German-lingo rights to more than 50,000 hours of programming.
But the Warner deal clearly tips the scales in RTL’s favor, a dream so tantalizing to Thoma that, at a CLT-hosted dinner in Berlin when the deal seemed uncertain, the Austrian-born exec threatened to quit if his shareholders did not OK the deal.