MGM, Blockbuster
in Net film deal
01/18/00- Updated 01:11 PM ET
SANTA MONICA, Calif. (Bloomberg) - Metro-Goldwyn-Mayer
Inc., which owns one of the world's largest film libraries,
and Blockbuster Inc. said they will develop a system to make
some MGM films available to consumers on the Internet.
The non-exclusive agreement with
Blockbuster, the world's largest video store chain, will allow
the companies to test and develop a business model for digital
streaming and downloading of video on the Internet.
The move gives MGM another way to distribute
its library of more than 4,100 titles by taking advantage of
consumers' growing use of the Internet as an entertainment
medium. It also gives Blockbuster, which has been planning to
use the Internet to deliver movies electronically, access to a
library that includes some of Hollywood's most popular films.
The companies didn't say which MGM titles
will be part of the agreement.
MGM and Blockbuster said they also agreed to
a new revenue-sharing agreement for both new releases and
library films on VHS-format home video. They didn't disclose
specifics, other than that the agreement is multiyear.
Typical revenue-sharing agreements lower the
up-front price that Blockbuster pays a studio for movies,
allowing the chain to buy more copies of popular films and
keep its shelves stocked. In return, Blockbuster shares some
of the rental revenue with the studio.
Dallas-based Blockbuster, which is
majority-owned by Viacom Inc., has about 6,900 stores around
the world. Its stock Tuesday rose 50 cents to $11.44 in early
afternoon trading.
Santa Monica, Calif.-based MGM's units
include MGM Pictures, United Artists Pictures and Orion
Pictures. Its stock fell 50 cents to $23.25.
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