Comcast-NBC may herald films on demand before DVD

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Comcast Corp's bid to take over NBC Universal may allow the top U.S. cable company to pioneer an industry game-changer: offering blockbuster films on movie-on-demand channels ahead of their DVD release.

Some Hollywood studio executives and media analysts say one of the benefits of such a tie-up is Comcast's ability to generate premium revenue from selling movies on-demand early.

If the cable operator wins control over NBC's prime film and TV content, Comcast could narrow the traditional "window" between a movie's theatrical run and its release for home entertainment, thereby boosting revenue, industry experts say.

"It's a potential game changer that could completely upset the traditional windowing position of the studios, if Comcast were to decide to get very aggressive in releasing new movies and TV shows in a variety of ways," said Tom Adams of Adams Media Research.

General Electric Co, which owns 80 percent of NBC Universal, and Comcast are working on a deal to spin off the media company into an entity valued at $30 billion, including debt, a source close to talks said. Comcast would hold 51 percent and GE 49 percent of NBC Universal, which owns a movie studio, and broadcast and cable TV networks.

If Comcast takes over NBC Universal, it could offer movie titles through its On Demand service for a premium, say $15 -- more than a typical theater ticket -- before making them available on DVD, said Michael Pachter, analyst with Wedbush Morgan Securities.

Pachter said it makes economic sense to provide films that way -- even at the expense of DVD sales later down the road.

"It's an extra way to make money. This gives Comcast the ability to create a new window. Time Warner Inc could have done it, but never did," Pachter said. "Comcast owning the content gives it the leverage to price it the way they want to price it."

Hollywood executives said on Friday they were closely watching to see if Comcast, which has long coveted owning media content and made a failed bid for buy Walt Disney Co in 2004, would favor its cable operation over the traditional theatrical model.

"Comcast at its core is a cable company. When they bought AT&T (Broadband in 2002), they changed the entire business model to make sure that at the core the cable company would grow," said one studio executive, who declined to be identified when speaking about a rival.

"When they made a run for Disney, they made clear they wanted to change the window for video on demand."

But others said it would be foolhardy to try. Disney CEO Bob Iger set off a furor among theater owners in 2005 after saying the time between movie and DVD releases should be shortened to save on marketing dollars and sustain consumer excitement for titles.

The "window" has shortened from about six months to about four months in recent years, but studios are loathe to erode box office revenue that's headed for a third straight record year.

"We continue to really respect the theatrical window," a second studio executive said. "In a recession where every other industry has been hammered to have increases in revenue and similar attendance to what you had in a record-setting year, that tells you what you need to know."

(Editing by Edwin Chan; editing by Andre Grenon)