Paramount Pictures has signed a multi-picture deal with streaming giant Netflix Inc., Jim Gianopulos, chairman of the Melrose Avenue film and television studio, announced Friday.
Gianopulos offered few details about the initiative during parent company Viacom Inc.'s fiscal fourth quarter earnings call with analysts. But the move represents a significant departure for Viacom, which was burned before by selling Netflix the streaming rights to its most popular Nickelodeon shows several years ago.
Wall Street analysts largely blamed Viacom's previous management for accelerating the rapid migration of children's viewership to streaming platforms and away from traditional TV networks. Ratings for Nickelodeon and Viacom's other television channels faltered _ and have never fully recovered.
But Paramount is coming off a prolonged dry spell and heavy financial losses. Gianopulos noted that Netflix, Amazon.com Inc. and Apple Inc. are collectively spending $20 billion a year on content at a time when other major studios, such as Walt Disney Co. and Warner Bros., have been pulling back on partnerships with Netflix and Amazon. The larger studios are motivated to steer their content to their own planned streaming services.
"Our priority is to expand our role as a global content provider," Gianopulos said. "We are exploring various new revenue streams in addition to our traditional theatrical releases as a producer of first-run films and television for other media platforms. Our first such partnership is a multi-picture deal with Netflix, which we are very excited about."
Viacom Chief Executive Bob Bakish said the current Netflix deal is markedly different from past arrangements. About eight years ago, Viacom sold Netflix the right to stream its TV tentpoles such as Nickelodeon's "SpongeBob SquarePants," which encouraged the audience flight. Now it plans to create separate titles for the Los Gatos, Calif., streaming service while also ramping up the content pipeline for its traditional TV channels and movie theaters.
"We will sell to them when and where it makes sense," Gianopulos said of the Netflix deal.
"They are looking for great properties and we have great intellectual property," he said. "We are looking at properties that are suitable for them."
Gianopulos _ who joined Paramount after a long and successful run at 20th Century Fox _ compared the Netflix deal to studios' practices 20 years ago of producing movies of the week for major TV networks such as CBS and NBC. "In this case, the quality is much higher," Gianopulos said, adding that the payout was much bigger.
After years of huge losses, Paramount Pictures beat analyst expectations for its fiscal fourth quarter by posting its third consecutive quarter of profit. The improvement was due, in large part, to Tom Cruise vehicle "Mission: Impossible _ Fallout," which generated nearly $800 million in ticket sales worldwide.
