Output deals bypassed for ‘first look’ pacts

Nets reluctant to take 18-25 studio pix per year

When showbiz dealmakers attach the word “output” to theatrical movie sales, broadcast and cable networks recoil in horror.

With more and more networks joining movie companies channels now under the same corporate master, output deals seemed like a no-brainer. But they haven’t panned out because the networks, particularly broadcast, couldn’t absorb as many as 30 titles in a given year from one studio.

In legalese, an output deal means the network signing the contract agrees to take all of the movies released by a theatrical distributor, including turkeys like Columbia’s “Basic” and Warner Bros.’ “Dreamcatcher.”

That all-inclusiveness is one of the main reasons that none of the major studios has managed to cobble together a full-scale theatrical output arrangement with a broadcast or basic cable network in the window that follows the exclusive license term for pay TV.

The networks have resisted swallowing between 18 and 25 major-studio titles a year, not only because of the volume of box office losers, but because some of the titles may not fit the network’s latest attempt to define itself for a specific target audience.

Although FX ends up buying the vast majority of the movies released by its sister company 20th Century Fox, it passed on “Unfaithful,” with Diane Lane (who got an actress Oscar nomination), because the movie’s dominant appeal is to women and FX’s schedule targets young males. TNT, which programs such female-skewing shows as “ER” and “Charmed,” bought “Unfaithful” for $4 million-$5 million.

The majors are not likely to write any output contracts in the near future, with one ongoing exception: the feature-length cartoons and family movies released by Walt Disney Pictures, which go to ABC and the Disney Channel. But DreamWorks and Revolution Studios have engineered output deals in the network window, in part because they release far fewer movies each year than the majors. DreamWorks titles have a five-year guaranteed network window, the first three to ABC and the final two to Turner Broadcasting’s TBS and TNT.

ABC has the option to take an extra run or two in its window of a blockbuster movie from DreamWorks. ABC also can decide to pass on a DreamWorks title. In that case, TBS/TNT, which has many more timeslots to fill than ABC, inherits the right to take over ABC’s three-year window at only a slight bump-up in license fees.

Revolution’s output is with Fox and FX.

The major studios have tried to sell output deals to network buyers by touting the benefits of getting the runaway hits without having to sweat out a bidding war.

But one veteran buyer, Bob Levi, former president of worldwide program planning and acquisitions for the Turner Entertainment Group and now a consultant, says that argument is a non-starter because of what he calls “the first-look opportunity.”

What he’s referring to are media giants that own a major studio, a cable network and a broadcast network and want all of these divisions to work together.

Why should TBS and TNT, for example, choke on the entire output of Warner Bros. in a given year just to get a box office winner or two, when the two networks can get that hit movie by agreeing to pay the marketplace price after Warners has put it out for bids?

Sometimes a negotiation can stray beyond the license fee for the one title coveted by TBS/TNT. If a cable competitor tells Warner Bros. it will take a batch of unsalable losers to get the rights to “Matrix: Unloaded,” TBS/TNT may lose “Unloaded” unless it’s willing to match its network rival’s appetite for theatrical duds. Examples of the first look setup are Touchstone with ABC and ABC Family, 20th Century Fox with the Fox Network and FX, and Universal with USA Network.

Levi says the ultimate shared-window model could turn out to be orchestrated by Paramount. A Paramount comedy could, in one multiple-year license term, embark on a winding journey through its sister networks Showtime, CBS, UPN, Spike, VH1 and Comedy Central.

Just don’t call it an output deal.

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