Scouring the walls

Starz' latest deal with Sony Pictures is a back-to-the-future move for old films

Columbia Pictures made headlines last week when it disgorged 500 movies from its 4,000-title library in one eye-opening seven-year deal with Starz and Encore’s 16 pay-TV networks.

The transaction, which included franchises such as “Spider-man,” “Men in Black” and “Bad Boys,” gave a jolt to the industry, reminding it that libraries are still a hot commodity among cable networks, particularly pay-TV channels.

The deal was a bit of a throwback to the mid- to late-’90s when the three pay-TV operations — HBO/Cinemax, Showtime/The Movie Channel and Starz/Encore — began creating multitudes of spinoff networks. Matthew Duda, exec VP of acquisitions, planning and distribution for Showtime Networks, says his biggest library deal back then was an 800-title contract that he cut with MGM.

The pay-TV spinoffs, called multiplex networks, breathed new life into the movie companies’ libraries, Duda says.

Starz is particularly gung-ho about older movies because it commissions very few original series, relying on libraries to keep its multiplexes stocked with product. The Encore group, for example, has networks devoted to Westerns, mysteries, love stories and family pictures.

Steve Shelanski, senior VP of programming and acquisitions for Starz, says the wide range of titles in the studios’ libraries meets the needs of these Encore extensions. But, he adds, like HBO and Showtime, he’s buying for the on-demand platforms programmed by Starz and Encore.

Starz is now also insisting on Internet rights in its output and library deals because the network has created a broadband Web site called Vongo.com, which offers hundreds of both old and new movies in the pay-TV window for a monthly subscription of $9.95. Customers can watch these movies on laptops or transfer them to a Microsoft portable media player.

The studios have agreed to sell these broadband rights, shiny-eyed with anticipation that all of these new-media platforms will develop a voracious appetite for theatricals, making movie titles as valuable as bars of gold bullion.

While pay-TV networks continue their raging love affair with library titles, ad-supported channels like USA, FX, and Turner’s TNT and TBS have shifted their dollars away from libraries in recent years, investing instead in movies coming into their first network window.

That freshness doesn’t come cheap: Four-year-exclusive blockbuster titles in the first window can cost a network upwards of $20 million apiece.

For older titles, Duda says, exclusivity is not the be-all and end-all. There are so many thousands of these pictures floating from network to network that it’s rare for Showtime to play an older movie during the same week as, say, Encore.

And it’s far cheaper: The typical non-exclusive library title will fetch in the neighborhood of $150,000.

The granddaddy of library-fueled networks, Turner Classic Movies, “has tremendous appeal to older Americans,” says Tom Karsch, exec VP and general manager of TCM. Because so few ad-supported networks program to the elderly, cable systems welcome the golden-oldie channels.

Doris Casap, senior VP of film programming for HBO, says she tends to seek exclusivity for library titles. HBO cherry-picks movies with big box office or strong critical acclaim.

HBO can afford to be selective because of the way it engineers its movie-output deals, which are totally separate from its library transactions. HBO and Cinemax, which get their output theatricals within a year of their debut in U.S. moviehouses, negotiate three separate pay windows for these movies instead of the usual two negotiated by Starz and Showtime.

That important third window means that, as many as 15 years after HBO took the first series of runs of an output movie, the network still has a batch of plays left, which it funnels to its multiplexes.

And HBO has another luxury — 40% of its current schedule consists of original programs, everything from scripted series like “Entourage” and “Big Love” and made-for-cable movies to standup-comedy specials and Saturday-night boxing.

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