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Premium Movie Channel JV Runs Into Trouble; Comcast Not Interested

The new premium movie channel supposed to be launched jointly by Viacom (NYSE: VIA) with MGM, Lionsgate and its own Paramount Pictures has run into some early trouble. Comcast, which was very close to coming on as a distribution partner, and perhaps even an exclusive one, has now pulled out, reports BW, citing sources. The premium TV and VOD channel, announced in April this year, was supposed to launch in the fall of 2009. The three studios each owns roughly 29 percent of the venture, with Paramount’s parent Viacom getting an added 10 percent stake for helping market the channel via MTV Networks.

Comcast was interested in the channel from the beginning, and even introduced Paramount into the venture, but the deal fell apart when the price to carry the channel started to creep up. It is questioning whether there is any need for a new movie channel, when even the movie viewership on existing ones like HBO and Showtime is declining.

Even though this could just be a negotiation ploy by Comcast, the studios are now scrambling to find other options, including offering “market exclusive” deals with satellite or telephone providers eager to steal subscribers from Comcast (NSDQ: CMCSA). Among the options being considered: Instead of $12 a month subscription fee (with the channel getting about half, the satellite or cable operator the other half), the new channel’s backers now are floating the idea of charging cable operators $1 to $2 per month for every subscriber, which the operator then would sink into its overall rates, the story says. Also, the companies are offering a partner three or so years exclusivity without its local competition getting it as well.

On the online/digital side, the three companies are even offering rights for movies for mobile devices and might even share the revenues from movies that the channel would sell online or through services such as iTunes, something Showtime and HBO are prohibited from doing.