How Much Hollywood For Comcast?

In a first-of-its kind deal, Comcast has struck a broad content distribution pact with Sony Pictures that includes plans to expand its video-on-demand menu.

Additionally, the cable giant is mulling an invitation to join a Sony-led consortium that is bidding $5 billion for Metro Goldwyn Mayer, a source close to the proceedings said.

Under that proposal, Comcast would contribute about $300 million for a minority ownership stake in the venerable Hollywood studio, the source told

Sony emerged as the leader in the MGM sweepstakes after Time Warner left the bargaining table. Time Warner has two divisions that
compete in Comcast’s space — Time Warner Cable and America Online.

In a statement, Comcast CEO Brian L. Roberts said the agreements “confirm the value of our scale and distribution platform.”

Roberts, who made a bold but unsuccessful bid for Walt Disney Co. this year, said the studio relationships present “some very interesting channel creation opportunities.”

Cable providers like offering VOD because the service can boost average revenue per subscriber. To date, however, movie studios have eschewed cable VOD companies in favor of DVD rental chains.

But Sony took notice of Comcast’s growing footprint. About 60 percent of Comcast’s 8 million digital cable subscribers have VOD capabilities, a figure that will jump to 80 percent by year’s end.

In addition to the VOD platform, the companies will form a joint venture (managed by Comcast) establishing new movie channels featuring studio content. Specifics concerning channel content and pricing have not been established.

Sony’s library includes about 3,500 movies, including recent hits like “Spiderman” and “Men in Black.” It also has the rights to 20,000 TV episodes.

MGM content is also expected to be part of the deal. However, if that
mega-merger stalls, Comcast and Sony will continue their distribution contract.

The latest developments are part of Comcast’s strategy of controlling the content that flows through its cable and broadband pipes. Yesterday, it teamed with the National Football League to launch a VOD game highlights package.

Earlier this year, Disney rebuffed its $46 billion buyout offer, but the companies later signed a modest distribution deal for broadband content.

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