April 3, 2003 7:15 AM PST

CinemaNow reels in Fox movie deal

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Twentieth Century Fox Film will begin licensing new feature films and classic movies to Internet film site CinemaNow, in the Hollywood movie studio's first Internet distribution deal.

Fox Film, a subsidiary of the Fox Entertainment Group, signed a nonexclusive agreement to license movies to Marina Del Rey, Calif.-based CinemaNow, which allows Web surfers to rent, download and watch full-length feature films on their PCs.

Financial terms of the deal were not disclosed.

Fox Film, like all major movie studios, has taken a cautious approach to the Web. Last year, the company left a video-on-demand venture, Movies.com, in partnership with Walt Disney, citing potential regulatory issues with Net distribution. It has also been fearful of the Internet piracy of the kind that has plagued the music industry through widespread swapping of media files in digital communities such as Kazaa.

Curt Marvis, CEO of CinemaNow, said that the opportunity is improving for studios such as Fox Film because of improved technology to showcase movies on the PC and to protect them from digital theft. Fox Films agrees.

"We expect our partnership to provide a legitimate alternative to combat the growing problem of online piracy, which has become the most critical issue facing our industry today," Peter Levinsohn, executive vice president of Twentieth Century Fox, said in a statement.

Marvis said that CinemaNow is negotiating licensing deals with all


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the major studios and hopes to have more agreements by the end of the year. The company has lobbied for deals with the major filmmakers in the two years since its inception, he said, but the studios' reluctance has dragged out the process. There are also rights issues with clearing classic films--as opposed to new releases--for use over the Web.

CinemaNow will sell two feature films from Fox Film on the site starting Thursday, and it will add a handful more throughout April. Those films, priced at $3.99 for 24 hours of unlimited viewing, include "Unfaithful" and "The Good Girl," with "One Hour Photo" to follow within a few days. The movies are released to the Internet during the "pay-per-view window," or at the same time they're available on satellite or cable pay-per-view channels, and 45 to 60 days after they're offered on home video.

Marvis said that CinemaNow's subscriber base increases between 15 percent and 18 percent a month and that the company expects to be profitable within the next 12 months. It has about 10,000 subscribers.

 

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