DreamWorks agreement still up in the air

“The Sopranos” and “Entourage” are monopolizing the HBO buzz these days, but in a move that reinforces the net’s commitment to theatrical pics, it has signed a long-term $1 billion-plus renewal deal with Universal.

Agreement, which will see the cabler continue to carry U titles through the middle of the next decade, allows HBO to sked the movies not only on all of the HBO and Cinemax nets and their on-demand platforms but also on broadband Web sites, where people could download U movies for a extra subscription fee.

HBO is also in negotiations with 20th Century Fox to renew its theatrical output deal; HBO sister companies Warner Bros. Pictures and New Line Cinema are also certain to sign new agreements with the network.

The question mark is DreamWorks, whose contract with HBO expires in a couple of years. DreamWorks is now a part of Paramount Pictures, a sibling of HBO arch-competitor Showtime.

Commenting on the new deal, Universal Pictures vice chairman Rick Finkelstein said, “This agreement is a very important piece of the financial structure of our films.”

The average movie in a pay TV output deal fetches $6 million-$7 million. Particularly with a modestly budgeted picture, that money can be a vital ingredient in a studio’s income projections when it decides whether to put a movie into production.

Because the deal includes U specialty labels Focus Features and Rogue Pictures, Finkelstein said there’s a cap on the number of movies HBO has to take each year. He declined to be specific, but such annual caps usually cut off in the mid-20s. As in the current contract, HBO will be able, in most instances, to take a pass on animated movies and on subtitled movies.

Finkelstein said that “an extra benefit of our long-term relationship is that HBO will promote our new movies by scheduling behind-the-scenes documentaries” to coincide with the theatrical release.

An outside observer, Steve Shelanski, senior VP of programming and acquisitions for John Malone feevee Starz, said the HBO/Universal deal “is an affirmation of the strength of movies within the mix of programming on pay TV.”

Starz is even more committed to theatrical movies than HBO, not only in its output deals with Walt Disney and Columbia Pictures but with an aggressive plan to produce and distribute its own theatricals through sister division Overture Films, under the direction of Chris McGurk. Unlike HBO, Starz produces very few original series.

The third pay TV network, Showtime, is moving away from theatrical output deals in favor of original series like “The Tudors,” “Dexter” and “Weeds,” plus a lineup of original theatricals to be commissioned by sister company CBS Films.

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