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Showtime, MGM Sign Output Deal

Showtime Networks Inc. has signed a $1.4 billion deal with Metro-Goldwyn-Mayer Inc. for up to 270 first-run films from the studio, access to 1,200 library titles and a commitment to jointly produce three new TV series, officials said last week.

The comprehensive agreement-which runs through Dec. 31, 2008-essentially extends, expands and renegotiates the terms of an existing agreement between Showtime and the film studio.

Showtime will now have exclusive pay TV rights to all MGM features released theatrically through 2000. Some of the varied titles included are Return to Me, with David Duchovny and Minnie Driver, and the upcoming Hannibal, the sequel to The Silence of the Lambs, which will again star Anthony Hopkins.

Showtime executive vice president of program acquisitions and planning Matthew Duda said the premium service's current deal with MGM expires in 2003. Showtime, however, wanted to lock in a longer agreement, since competition for theatricals is so fierce, with Home Box Office and Starz Encore Media Group LLC also bidding.

Showtime's main output deals are with MGM and Paramount Pictures, according to Duda. Paramount, like Showtime, is part of Viacom Inc.

"This latest deal really salts out our strategic objectives with Paramount and MGM product," he added.

The new output deal also calls for MGM Television Entertainment and Showtime to create and produce three new original series, which will premiere in 2003, 2005 and 2007, respectively. As part of the agreement, Showtime has also picked up a fifth season of the series Stargate SG-1 from MGM.

Also under the terms of the agreement, Showtime will be able to offer MGM movies on several subscription video-on-demand channels during its pay window, Duda said, adding that Showtime is now testing a SVOD service.

The newly negotiated contract also allows Showtime to exclusively offer MGM's movies over the Internet during Showtime's pay TV window, according to Duda. An MGM spokeswoman said Showtime's Internet rights are subject to such conditions as the quality of the video stream.

Added Duda, "An important philosophy for us is that during our own window, we want to be the exclusive place to find these movies through all delivery mediums, including the Internet."

The approach contrasts with that of Starz Encore, for example, which hasn't insisted on such exclusivity. Earlier this year, Starz Encore inked a $1.7 billion output deal with Sony Pictures Entertainment in which the studio retained Internet right to its films, even during Starz Encore's pay window.

Starz Encore also has Internet rights, as well SVOD rights, to Sony's films. "It's shared Internet use," a Starz Encore spokesman said.

Showtime will also license up to 1,200 titles from the MGM film library over the next six years.

But MGM said that is not exclusive-Showtime will get 18-month windows on those films, which means MGM can go forward with plans to create its own MGM-branded cable channel based on its vast library.