More fallout from the fading of home video disc sales: Paramount Home Entertainment has agreed to let Universal Pictures Home Entertainment distribute its DVD and Blu-ray discs in overseas markets where Paramount has an office. The five-year deal begins in the UK on July 1. Paramount will make an annual payment to Universal; the transaction and economies of scale could benefit each company as much as $20 million a year, I’m told.

The arrangement “will create an important opportunity for us to strengthen our international distribution business during this transformative time in the home entertainment space,” Paramount vice chairman Rob Moore says. Universal Pictures chief distribution officer Peter Levinsohn says the additional scale will offer “meaningful benefits.”

The deal with Paramount follows a revamping at Universal Pictures Home Entertainment in October to adjust to the growing importance of overseas markets. The Comcast-owned company centralized its global leadership in Los Angeles under President of Home Entertainment Eddie Cunningham who reports to Levinsohn.