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Comcast Inks Content Distribution Deal as Part of MGM Sale

Sep 14, 2004  •  Post A Comment

In a bid to secure content for its burgeoning video-on-demand service, cable giant Comcast on Monday inked an agreement with Sony Pictures Entertainment and the equity partners in Metro-Goldwyn-Mayer to offer Sony- and MGM-owned films on Comcast systems and use content from the two studios to launch new channels.

As part of the content distribution pact, Comcast will consider buying a stake of as much as 20 percent, or $300 million, in the Sony consortium that agreed in principle on Monday to buy MGM for $12 a share.

Sources said the agreement Comcast struck with Sony helped the film studio put together a last-minute winning bid for MGM. Sony, along with a team of private-equity partners, agreed to pay $3 billion cash, plus the assumption of $1.9 billion in debt, for MGM.

In addition to distributing MGM and Sony content on Comcast’s VOD platform, the partners will create a joint venture, managed by Comcast, and launch new channels using content from the two studios.

Gaining content has been an important piece of the puzzle for Philadelphia-based Comcast. Earlier this year the company made an unsolicited $54 billion bid for the Walt Disney Co. on the belief that the cable company could leverage Disney’s content on its platform of 21.5 million subscribers.