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TK's MORNING BUZZ: Hard-Bargaining John Antioco is Back at the Negotiating Table as More Revenue-Sharing Deals Come Up for Renewal

25 Jul, 2001 By: Thomas K. Arnold

John Antioco can be a tough negotiator.

In January, he was talking tough while renegotiating a revenue-sharing deal with Universal Studios Home Video. He ended up with slightly lower VHS minimums and lucractive video-on-demand rights, to boot.

Now, Antioco is back at the negotiating table, as two other revenue-sharing deals -- believed to be with Fox and Disney -- are coming up for renewal.

And in his conference call with analysts yesterday morning, Antioco bluntly stated he may allow one or more deals to lapse as they come up for renewal and focus on developing other ways to bring in product.

Coincidence? I don't think so. My take: Revenue-sharing deals that made sense a year ago no longer do, and Blockbuster, which initiated these deals in the first place, wants out.

It's been four years since a battered and beleaguered Blockbuster first convinced studios to share rental revenue with the chain in return for significantly lower out-of-pocket expenses. Blockbuster wanted to bring in huge quantities of the hits, on the cheap, and revenue-sharing enabled the chain to do so.

But, as they say, that was then and this is now. DVD rentals are soaring, VHS rentals are flat and expected to fall, and Antioco no longer needs the sheer mass of cassettes he's been able to bring in under revenue-sharing. He's particularly down on secondary product -- which explains Blockbuster spokeswoman Karen Raskopf's remark to Video Store Magazine reporter Seth Goldstein that "total output arrangements may not make sense" any longer.

Antioco may be trying to send a message to the studios whose revenue-sharing pacts with Blockbuster are coming up for renewal that they're going to need to make some concessions, the way Universal did. VHS ain't what it used to be, and it's not going to get any better.

In retrospect, Universal did great, with Blockbuster agreeing to trim VHS orders no more than 3%. At this point, other studios would probably lick their chops at the mere prospects of a 3% reduction.

It will be interesting to see how all this plays out.

Comments? Contact TK directly at:TKArnold@aol.com

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