After a long period of silence, Warner Bros. Domestic Cable Distribution emerged from its shell by selling partial broadcast rights to 21 movies to Oxygen for what some sources said was about $60 million.
Oxygen plans to use the films to build a platform that will help it launch original programming, President of Programming Debby Beece said. After a huge investment by billionaire Paul Allen, Oprah Winfrey and others, the upstart women’s network said it will finish the year in the black and is ready to buy movies from other studios.
The deal left other cable network executives shaking their heads.
Some wondered how Warner Bros. was going to sell the remaining windows for these films, which include “Alex & Emma,” “Raising Helen,” “Catwoman,” “Million Dollar Baby” and “Phantom of the Opera.” Executives estimated that Oxygen paid about 71/2 percent of box office for half the broadcast window-a high price, considering studios struggle to get to 15 percent on deals these days.
Since Oxygen bought the rights to show about half the films first on cable, including “Ocean’s 12” and “Miss Congeniality 2: Armed & Fabulous,” they wanted to know who’ll buy the rest of the window and provide Warner Bros. with anything close to another 71/2 percent. “Who’s going to want to go behind Oxygen on some of these films?” a network executive wondered.
Others questioned when Warner Bros. will be able to sell the other films on its shelves. The studio has been looking to make big output-type deals with networks, and in the meantime, the studio had about 50 films waiting to be sold when the Oxygen deal was announced.
Eric Frankel, president of Warner Bros. Domestic Cable Distribution, said the Oxygen deal was part of the studio’s strategy to broaden the market for its films. Historically, USA and Warner Bros.’ sister companies TNT and TBS have bought the majority of the theatrical movies on cable. While they continue to buy, “We’ve spent a lot of time doing missionary work to get a number of other clients in the business,” Mr. Frankel said, referring to Oxygen. He said he expects to announce more deals soon.
“In most cases it’s not going to be the usual suspects,” he said. The trick to dealing with networks such as Oxygen is putting together packages of movies that fit in with networks that appeal to niche audiences. If he does his job right, Mr. Frankel said, all of the Warner Bros. films will fit into a package with one network or another. Some network executives said they prefer to buy their films the old-fashioned way-title by title, as they begin to show how well they’ll perform at the box office.
Although the broadcast networks have reduced their consumption of films, Mr. Frankel maintained there is strong demand from cable for theatrical films. Oxygen’s top-rated program of all time was the movie “Whale Rider” earlier this year.
“We have been trying to achieve more broadcast premieres and fresher titles for some time and this is the culmination of that,” he said. “We very much see these movies as a platform to launch our original programming, which we see as our mandate and our ultimate success.”
While most of the films in Oxygen’s Warner Bros. package don’t become available until 2006, Oxygen plans to make a splash with “Murder by Numbers” in February. When the other films become available, Oxygen will try to create some sort of movie franchise that would be a regularly scheduled event.