Time Warner’s pay-cable channel HBO has renewed its deal for movies from Universal Studios through 2022.
For HBO, the agreement means it has long-term agreements with three major Hollywood studios for movie content. Besides Comcast’s Universal and HBO’s sister studio Warner Bros., HBO also has a so-called output agreement with News Corp.'s 20th Century Fox. HBO also has pay-TV rights to films from Summit Entertainment.
Although terms of the agreement were not disclosed, people familiar with the pact said the terms are similar to those HBO agreed to when it renewed its agreement with 20th Century Fox last year. That deal calls for HBO to pay over $200 million a year for 20th Century Fox movies. In output deals, pay-TV providers typically pay between 10% and 12% of the U.S. box office of each film up to $200 million.
While HBO has been increasing its original programming lineup over the past two decades, movies continue to be vital to it. About 84% of viewing on HBO channels are of theatrical movies. HBO’s studio deals give it access to about half of Hollywood’s major releases.
HBO’s move to lock up Universal comes just weeks after Netflix landed rights to movies from Walt Disney Co., which previously had been affiliated with the Starz pay cable network. Netflix is also expected to bid aggressively for movies from Sony Pictures, which is also currently affiliated with Starz. HBO is not expected to make a play for Sony.
The agreement between Universal and HBO will probably throw cold water on speculation in investment circles that Universal parent Comcast Corp. would try acquire Starz, which is being spun off into a public company by Liberty Media.
Follow Joe Flint on Twitter @JBFlint.