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MGM chief jousting

Sez tech's a threat but content's still king

A correction was made to this article on Nov. 10, 2004.

NEW YORK — Comcast’s role in the Sony-MGM deal was important — but apparently not enough to convince outgoing topper Alex Yemenidjian that the cabler has gained more clout in the ongoing tug of war between content and distribution.

“The reason it’s important to have distribution and control is because most of the stuff (that’s put out) isn’t that good,” a jovial Yemenidjian told an audience of Wall Street analysts Monday, adding that the only content that “needs” distribution is bad content.

“Twenty percent may be great, 80% isn’t,” he said. “If you produce great content, all distribution will beat a path to your door.”

Yemenidjian is expected to leave his post after Sony’s acquisition of the Lion is complete, so he gave what may be one of his last briefings to Wall Street analysts in Gotham on Monday. They praised him for achieving a good price for the studio and for boosting its stock 44% in five years.

In a wide-ranging talk, Yemenidjian argued there’s plenty of growth left in the DVD revolution, that high-capacity DVRs will hobble the TV syndication business and that Hollywood’s film download service Movielink is failing — but that’s a good thing.

He said the price for thesp talent is out of control, with a dozen making $25 million per pic, and studio heads are bracing for the price-per-actor to inevitably hit $30 million.

“You always live in fear in this business that you’re going to wake up one day and look in the paper and see that some idiot gave someone $30 million instead of $25 (million),” he said. “You just deal with it.”

Technology is going to change the film business, but not the essential truth that good content has a leverage advantage over distribution, which is becoming commoditized with cable, satellite and telcos vying to provide video, broadband and telephone service.

“The most important part of the vertical chain is great content and having great cable channels,” he said. “If you produce great content, I don’t think you need to own the pipe.”

But two technologies threaten the film and TV businesses: the merged PC-TV and the high-capacity digital video recorder.

Yemenidjian said the film business got lucky in that its product is not easily pirated and the industry has been able to begin antipiracy efforts before its business gets ravaged.

Right now, film downloads are primarily for the techno-savvy, not a mass-market phenom. But all bets are off if a mass-market device allows easy download and then playback on a TV.

A partner in Movielink, Yemenidjian takes some solace in the slow take-up of the service. “Movielink hasn’t been very successful, and I think that’s good news,” he said.

It shows that consumers are generally happy with the product they get and that file-sharing for film is “primarily for bragging rights.”

The high-capacity DVR, however, is a huge threat to the film and TV biz. As disk storage becomes cheaper, with drives able to store 500 movies or TV episodes, consumers will use them as home media servers, decimating the DVD and TV syndication business.

“When you can transfer that to someone else, that’s Armageddon,” he said.

Topper said the only solution is to work with electronics manufacturers and the Justice Dept. to ensure that functionality doesn’t make its way into the next generation of boxes.

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