How Many Ad Share Partnerships Do Big Media Companies Need?

Will “advertising share” be a bigger deal-point for modern TV/movie content companies' partner agreements?

For decades, TV stations have had ad-share deals with broadcast TV networks and pay TV distributors (cable, satellite and telco), as well as cable networks. Now, this “ad share” deal has come to the theatrical movie business.

As part of a new deal with AMC Entertainment, Universal Pictures will offer an ad-revenue share deal for streaming revenue of Universal films -- in exchange for letting Universal get movies faster to streaming platforms, that is, a shorter window for theatrical exclusivity. AMC agreed to cut that to just 17 days from the industry standard of 90 days.

Details of AMC's advertising share hasn’t been disclosed.

At the same time, two big premium video sites -- Peacock and HBO Max -- have been trying to negotiate deals with Roku and Amazon. No deals are in place yet. What’s the hold up? Advertising and other revenue share (subscription fees) -- the former for Peacock and the latter for HBO Max.



This is a modern approach to TV and movie deal-making. Existing or new distribution partners want to share in the wealth -- not just pay a perhaps static, hard-to-change fee.

Advertising is a good deal point because its value theoretically continues to go up. (Subscriber-fee revenue sharing may have that as well, but only if price escalators are part of an agreement.)

TV stations have long shared in the wealth of advertising with TV networks, getting two minutes of local TV advertising an hour to sell on average. Similarly, pay TV operators -- cable, satellite and telco pay TV providers -- also get two-minutes of local ad time to monetize from cable TV networks.

Industry analysts were initially shocked that movie theaters would actually get a piece of theatrical movie revenue after leaving theaters.

Why would big media companies want to cede a piece of their prized new streaming businesses? Because of the upside — being able to distribute movies via streaming -- at perhaps $20, $30, or $40 per rental can be a big money maker.

Somewhat surprising, the deal came after some tough talk from AMC.

Soon after Universal took “Trolls World Tour” out of theatrical distribution in April for distribution on streaming platforms, Jeff Shell, CEO of NBCUniversal, projected both theater and streaming platforms would see the move as key to growing the film business. AMC felt it was being pushed aside.

All to say future TV/movie deals will continue to see partnerships -- frenemies or others -- where we least expect it. Think “sharing” of revenues, perhaps of many different types yet to be considered.

Still, in reacting to the AMC-Univeral deal, another major U.S. movie theater chain, Cineworld, which owns Regal Theaters, said it would not change its policy and will “only show movies that respect the theatrical window,” the company's CEO told CNBC.

Financial traditions can die hard.

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