Viacom leads new pay TV, video-on-demand venture

NEW YORK (Hollywood Reporter) - The premium TV channel landscape and Sumner Redstone's media empire were hit by an earthquake Sunday.

Viacom Inc. and its Paramount Pictures unit have formed a joint venture with Metro-Goldwyn-Mayer Studios and Lionsgate launch a premium TV channel and video-on-demand service in the fall of 2009.

The news could be a sign of internal strife at Redstone's empire, as it will have a major effect on Viacom sibling CBS Corp.'s Showtime cable channel. The premium network has output deals with Lionsgate, MGM and Paramount that are set to expire and won't be renewed given that the new venture will have exclusive pay TV access to its partners' content.

Redstone is chairman and controlling shareholder of both, Viacom and CBS.

CBS Corp. CEO Leslie Moonves was understood to be briefed on the venture plans Sunday.

The studio venture combines new and classic feature film output and original TV series, giving it exclusive access during the pay TV window to such recent and upcoming films as "Iron Man," "Star Trek," "Pink Panther 2," "Cloverfield," "Robocop." It also covers library hits such as "Dirty Dancing," "Reservoir Dogs," "Crash," "Braveheart," "Forrest Gump," the "Godfather" series and the Rocky and James Bond franchises.

The venture was unveiled Sunday by Viacom CEO Philippe Dauman, Paramount Pictures, chairman and CEO Brad Grey, MGM chairman and CEO Harry Sloan and Lionsgate co-chairman and CEO Jon Feltheimer.

The venture also is expected to name a CEO soon.

Although the companies didn't disclose their ownership stakes in the as-yet-unnamed venture, Viacom is clearly taking the lead role in it. The company will provide "operational support to the venture, including marketing and affiliate services through its MTV Networks division," it said. Given Time Warner-owned HBO's dominant role in the premium TV space and its other challenges, being able to rely on MTV's pull with cable and satellite TV operators may prove an advantage.

However, it was not clear what innovative approaches to premium TV programming and distribution the new venture may include as the partners in a statement vaguely spoke of "next generation" opportunities, a possible hint at future online and other digital components.

"This venture has the potential to be a game changer for the industry," Dauman said. "We are building an innovative service that will use traditional and new digital distribution technologies to bring great film and television entertainment directly to the consumer."

Sloan said the partners "share our vision of providing first-run movies and premium-quality original television programming across linear and digital platforms in a new way." He also said the service will offer "flexibility for program distributors as well as consumer options."

Reuters/Hollywood Reporter