Netflix signs cine accord with Relativity Media

LOS ANGELES – Netflix Inc has addled a accord with Relativity Media LLC to awning its movies advanced of pay-TV channels for the aboriginal time, putting it in antagonism with the brand of Time Warner's HBO or Showtime.

Analysts say the Relativity accord is acceptable the aboriginal of many, arduous the years-long exclusivity that exceptional cine channels now pay for. The best of Netflix over HBO and its aeon reflects how studios are adorable to the Web for administration while award themselves affected in cher amount battles with cable networks.

Under a accord admired as aerial as $32 actor a year, the fast-growing Web movie-subscription account will beck Relativity films such as the Christian Bale agent "The Fighter" and "Skyline" in aboriginal 2011.

Relativity Media has financed, co-financed or produced added than 200 affection films, but the Netflix accord covers alone films it owns entirely. Relativity has added than 10 films appointed for absolution in the abutting 12 months.

"It is bright that Netflix is acceptable a adversary to cine channels, which is acceptable for studios because they now accept addition new accommodating to pay acceptable money for that content," said Barton Crockett, analyst with Lazard Capital Markets.

After a blur is appear in theaters, it is commonly appear on DVD/Blu-ray followed by pay-per-view or video-on-demand and again to what is alleged the first-run window on exceptional cable channels like HBO and Liberty Media Starz.

Analysts said above studios are bound in abiding deals but appraisement has become an affair as cable channels about-face added to aboriginal series. Abounding experts accept back these deals expire about 2015, Netflix will footfall in.

"While Netflix is ambidextrous with a almost baby amateur in Relativity, they're introducing a new archetypal and acceptable addition Pay TV arrangement player," said Tony Wible, analyst with Janney Montgomery Scott, who estimated Netflix may absorb $20 actor to $32 actor per year to beck Relativity films that ability accept played on exceptional channels.

"This accord should be a absolute for agreeable owners as they will apparently accept assorted parties allusive for their artefact bottomward the road," he said.

"With the networks blame for bigger deals on the cine licensing renewals, it looks like we're affective against an befalling for Netflix, which is advantaged to attempt for those rights, but we're several years away," said Tom Adams of Adams Media Research.

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Netflix, with about 14 actor subscribers, is already closing in on the 16.5 actor subscribers that cable arrangement Showtime reaches, but is bringing in beneath dollars per subscriber with its $8.99 a ages plan than cable networks.

Netflix has a abundant abate programing account as well.

"With beneath subscribers advantageous beneath money per ages than these cable networks, Netflix has beneath money advancing into the door, which could accomplish aggressive behest a challenge," Adams said, ciphering that HBO will absorb $1.45 billion for programing in 2010. By contrast, he sees Netflix spending $517 actor for agreeable in 2010, including $150 actor for streamed programing.

Nevertheless, the bazaar has already started shifting. CBS Corp's Showtime banned to renew with Paramount in 2008 over cine appraisement to focus added on new alternation and films from absolute studios like Summit and the Weinstein Co.

Paramount again launched Epix, a new cine channel, with Lions Gate Entertainment and Metro-Goldwyn-Mayer.

Netflix currently has a accord with Starz to action the cable channel's agreeable online but analysts brainstorm that accord could expire ancient in 2011 or 2012.

"Netflix got an acutely adorable accord with Starz and it angered some studios. Back that accord expires, the appraisement may bifold or amateur from what Netflix is currently advantageous Starz," said Wible, acquainted that accord is estimated at $50 actor to $60 actor per year.

"Netflix may be application this Relativity accord as a advancement to the admeasurement that they may not get Starz anymore or a barrier for negotiating," he said.

Netflix shares concluded 0.2 percent college at $107.27 on the Nasdaq on Tuesday afterwards ascent as abundant as 4 percent during the day.

(Additional advertisement by Sakthi Prasad in Bangalore; Editing by David Holmes, Matthew Lewis and Bernard Orr)