Without In Demand as a backstop, several small and midsized operators are saying no thanks to early pay-per-view windows for Scary Movie 2
and Pearl Harbor.
Some In Demand affiliates said they won't guarantee The Walt Disney Co.'s Buena Vista Home Television the two movies will generate a buy-rate of nearly 30-percent, which means that almost 30 percent of addressable homes would purchase the movies at some time during their run.
In Demand used to make that guarantee on behalf of affiliates, ensuring they wouldn't lose money if sales didn't meet the target. But now In Demand is leaving that up to the affiliates themselves.
Without the guarantee, operators won't get early windows of about 45 days after a film's home-video release, but 70 days before typical PPV openings.
The bulk of In Demand's affiliate subscriber base will get to order Pearl Harbor
on its early-window PPV debut date, Jan. 19, and Scary Movie 2
on Feb. 1, though.
In Demand's MSO owners — AT&T Broadband, Time Warner Cable, Comcast Corp. and Cox Communications Inc. — have agreed to pay the guaranteed amount, sources said.
But sources also said those MSOs are contractually obliged to make the guarantees, commitments that do not carry through to In Demand affiliates such as Adelphia Communications Corp. and Charter Communications Inc., which don't own stakes in the pay-per-view distributor.
Cable competitor DirecTV Inc. also agreed to the guarantees, sources said. Buena Vista representatives would not comment.
Executive vice president Robert Jacobson said In Demand was giving affiliates the chance to figure out whether paying for an early window "best serves their needs and the needs of viewers."
But sources close to the situation say the decision comes down to dollars. At a time when In Demand is negotiating to lock up long-term video-on-demand rights — as well as out-of-market professional sports packages — it can't afford to underwrite early-window losses, sources said.
"Disney is insisting on a guaranteed buy-rate that we don't feel is achievable," said one cable operator executive, who asked not to be identified. "These are substantial buy-rates that are hard to reach for all titles in a given month, much less one or two movies."
Until recently, operators had clamored to offer PPV movies on dates as close as possible to their home-video releases and were willing to pay guarantees.
But while buy-rates improved, they did not hit the lofty levels Buena Vista and other studios demanded.
($198 million at the box office) and Scary Movie 2
($71 million) were popular titles, but operators say a 45-day early PPV window is too large to justify a big guarantee.