Network signs carriage deal with cable unit

The MGM HD network has signed its first cable-operator contract, a carriage deal with Comcast that comes on the heels of satellite-distributor agreements with Dish Network last week and DirecTV in October.

For Comcast, getting MGM HD is another element of its strategy to offer more than 500 high-def video-on-demand choices, including movies and TV series episodes, at any given time. MGM HD is making available to its distributors not only the 24/7 network but individual movie titles for high-def VOD.

“MGM has remastered 1,200 of our movies in true 1080i,” which yields the most dazzling HD image, said Jim Packer, co-president of worldwide TV for MGM. The Lion’s 4,100-title library includes the James Bond movies, “Dances With Wolves,” “Apocalypse Now,” “The Great Escape” and “A Bridge Too Far.”

Because it’s commercial-free, MGM HD gets its revenues from monthly cable and satellite license fees, which come to about 50¢ a subscriber. That’s a relatively high rate card, which guarantees that MGM HD will end up as part of a separately priced item on the customer’s bill.

DirecTV charges its customers extra fees for an HD tier of networks. Derek Harrar, Comcast’s senior VP and general manager of video services, said Comcast duns its subscribers a monthly tariff in the $10 range for installation of a specially constructed HD digital box. (The tariff goes up if the box also includes a DVR with HD capability.)

Packer and Harrar declined to discuss financial terms, but SNL Kagan projects that MGM HD’s negative cash flow will improve from a negative $23.7 million last year to a projected negative $9.3 million in 2008. The cash flow figure is expected to swing to a positive $2.8 million in 2009.

Since the network’s schedule draws on the inhouse library, MGM HD kept its programming expenses last year down to a modest $20 million, a number that will go up only slightly in 2008.

Harrar said Comcast is scoring millions of call-ups each month for its high-def VOD movies, generated in part by lots of promotion and marketing. For example, last month, Comcast promoted a gangster-movies-in-HD stunt, featuring “American Gangster” and such golden oldies as all three “Godfather” pictures, “Goodfellas” and “Scarface.” The recently released “American Gangster” cost subscribers a pay-per-view fee, but the other titles were free.

In addition to MGM HD, Comcast has just added high-def VOD programming from Showtime and Starz. The Showtime HD programming includes episodes of “Dexter,” “The Tudors” and “Weeds.” The Starz HD lineup features pics such as “Meet the Robinsons,” “Ratatouille,” “Spider-Man 3” and “Pirates of the Caribbean: At World’s End.”

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