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Blockbuster, Weinsteins sign exclusive deal

UPDATE: Studio signs four-year pact for theatrical, DVD premiere titles

By Susanne Ault -- Video Business, 11/15/2006

Blockbuster's John Antioco (c.) announced the deal with TWC's Bob Weinstein (l.) and Harvey Weinstein. Photo: Robin Weiner/U.S. Newswire/U.S. Newswire Photography

NOV. 15 | The Weinstein Co. has struck an exclusive direct sales relationship with Blockbuster Video for the rental channel, covering the studio’s theatrical and direct-to-DVD titles for the next four years.

Under the pact’s terms, effective Jan. 1, Weinstein will not sell its titles to any rental retailer other than Blockbuster outlets. Each title will be serviced exclusively to Blockbuster for a three-year period. In return, Blockbuster will pay TWC an unspecified minimum guarantee based on box-office performance for theatrical titles and on acquisition costs for DVD premieres.

Blockbuster and TWC will share in resulting rental transaction revenue.

Weinstein titles will continue to be widely serviced to sell-through retail channels. Genius Products distributes all Weinstein titles for rental and sale.

Under the First Sale Doctrine, all rental retailers have the legal right to rent TWC's titles, but they will have to purchase them from another source and will not have the option of revenue-sharing.

“As movie lovers, we have always aimed to produce and acquire films that people will enjoy, so we feel that this agreement is a win-win for [The Weinstein Company], Blockbuster and for consumers,” TWC co-chairs Bob Weinstein and Harvey Weinstein said in a statement. “The unique combination of Blockbuster’s established in-store retail experience with the power of their online subscription service was one of the biggest factors that attracted us to this alliance.”

Online company Netflix has been an industry darling for some time with its innovative rental subscription service. It has won numerous exclusive windows for indie titles. But Blockbuster is considered to have the largest overall share of the rental industry when combining both its bricks-and-mortar and online businesses.

A Netflix spokesperson declined comment on the Weinstein-Blockbuster alliance.

“These titles won’t be available to Netflix, but through [Blockbuster's] 5,000 stores and going online, every customer will be serviced,” Bob Weinstein said during a Wednesday conference call with reporters. “This is why we did the deal.”

Blockbuster chair and CEO John Antioco did not say whether the company was seeking additional exclusive deals with studio partners.

“We’re not focusing on anything but making this deal a total success,” he said. “There will be some 60 films per year that will come out of The Weinstein Co., which is a full plate of movies we’ll promote to our customers.”

Previously, Blockbuster has enjoyed sole rental control of certain Showtime titles. But Antioco noted that the Weinstein pact marks the most extensive rental exclusivity deal inked to date.

“Clearly, people have dabbled with exclusive content, but this is the biggest thing anyone has ever done,” Antioco said.

Mom-and-pop video stores, in addition to larger Blockbuster competitors Netflix and Movie Gallery, could be negatively impacted by the absence of Weinstein product. But there is a sense that Blockbuster rivals will work to be resourceful.

“Exclusives are almost silly, because someone still might try to get the movies at Costco or Sam’s Club [and then rent from their own store],” said one source. “That has happened before with exclusives. Consumers benefit from the open environment.”

The first Weinstein titles to be part of the Blockbuster deal include Nov. 23 theatrical Bobby, starring Anthony Hopkins and Sharon Stone; Billy Bob Thornton-headlined School for Scoundrels; martial arts flick The Protector; Beatrix Potter biopic Mrs. Potter with Renee Zellweger; and Dixie Chicks documentary Shut Up & Sing.

Additionally on deck from the Weinsteins and Genius are Grindhouse, directed by Quentin Tarantino and Robert Rodriguez, The Nanny Diaries with Scarlett Johansson and CGI family film Arthur and the Invisibles.

DVD street dates were not detailed.

The Weinstein agreement is the latest in a string of major moves by Blockbuster to boost its company. Earlier this month, the chain launched its Total Access program, which allows online customers to return rented titles to stores or through the mail. The program also helps customers earn free movie rentals.

Also in early November, Blockbuster began testing Blu-ray Disc and HD DVD rentals in about 250 of its corporate stores.

“As evidenced by our recent introduction of Blockbuster Total Access, Blockbuster is always looking for ways to give our customers the products and services they want and can’t find any place else, and this agreement will enable us to do just that,” Antioco said. “Now, as the exclusive rental provider, we’ll be the only place, in-store and online, that can guarantee customers a wide selection of The Weinstein Co. films for rent.”

Blockbuster will highlight its Weinstein DVD coup by displaying titles within in-store and online special sections. All Weinstein titles are guaranteed to be in stock, so if a DVD is not available, consumers earn a rain-check for a free rental of that film.

“We can broadcast the first day’s shooting of the movie [through Blockbuster Online and its new Total Access program]," said Harvey Weinstein. “By teaming with Blockbuster, we can outdo what we ever did in rental. We can touch customers and navigate our own products."

The chain expects to share consumer rental patterns with the Weinsteins, which the supplier will use toward creating future film projects.

“We have a greater reason to market these films,” Antioco said. “We will make it clear that these movies are available at Blockbuster. You won’t be able to go into a Blockbuster store in January and not notice the fact that these movies are available.”

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