Don Groves is a Deadline contributor based in Sydney
EXCLUSIVE: Using its clout as Australia’s dominant pay-TV platform, Foxtel is trying to drive a hard bargain with Warner Bros., Disney, Village Roadshow and independent distributors as it negotiates new movie deals. Foxtel is seeking to slash license fees by as much as 40%, Deadline has learned, as it pursues its aim of owning, producing and managing the movie channels on its platform. Buying films direct from the studios and indies, as sister company Sky does in the UK, will enable Foxtel to significantly lower its programming costs after years of paying over-the-odds in output deals negotiated by the two major local platforms, Showtime and The Movie Network.
Sony, NBCUniversal, Paramount, Fox and Liberty Media have agreed to sell the Showtime channels to Foxtel, effective October 31. Showtime’s contract wasn’t due to expire until the end of 2013 but the studios were persuaded to terminate that deal so they could obtain preferential terms as the four majors with which Foxtel is allowed to do exclusive deals under an agreement with the Australian Competition and Consumer Commission. Ending output deals also means Foxtel can refuse to buy sub-standard TV movies and direct-to-DVD titles that were part of those arrangements, further lowering its costs. Foxtel is also negotiating with The Movie Network (co-owned by WB, Disney, Village Roadshow and MGM), whose contract runs out December 31 and is unlikely to be renewed.
This week, Foxtel set out the terms under which it would buy films from the four largest indies, Hopscotch eOne, Icon, Hoyts and Transmission, starting next January. Those four would be offered exclusive deals, as allowed by the ACCC, but it’s believed the license fees would drop by around 40% or more for films that achieve low Oz box office. The independents are hoping Foxtel is prepared to sweeten the deals when negotiations get underway. Foxtel is seeking SVOD rights as part of the new contacts, intending to launch that service in early 2013. The Movie Network partners and the independents face a potential problem: If they can’t get the terms of trade they want from Foxtel, there is no significant alternative. Unlike the UK, Australia has just a few IPTV services including Fetch TV and Quickflix, all with limited reach.