Pay-Per-View takes a big gamble

Boxing and wrestling fans by the millions have anted up $35 or $40 per household for championship bouts on cable TV’s pay-per-view option for years. Country-music devotees readily paid $25 each to bid adieu to the Judds in their December PPV special. Now those lords of cable who won by betting that sports and concerts would land pay per view on the TV map are preparing a much bigger wager: that a generation of cocooning baby boomers raised on TV will plunk down $39.95 for world-premiere showings of blockbuster movies like Home Alone III or Lethal Weapon IV at home. That’s right — before the films arrive in theaters.

Right now, about 20 million homes are equipped to receive pay-per-view events, according to Paul Kagan Associates, and big ones like the Holyfield-Foreman fight last April can bring in one-night grosses of up to $49 million. With the number of PPV homes expected to reach 35 million by 1996, cable TV powers like Tele-Communications Inc. CEO John Malone are telling Hollywood studios that a $100 million opening night for a big movie will be as simple as popping up a bowl of Orville Redenbacher’s finest.

While the studios’ take from theaters has stayed flat for the past two years, the only studio chief to publicly express interest in opening films on TV has been Fox’s former CEO, Barry Diller, who recently resigned. Other studio execs, including Diller’s former colleagues, are on the fence. ”Our goal is always to create new distribution outlets for our products,” says Strauss Zelnick, president of Twentieth Century Fox. ”But I’m not sure how you could get consumers to pay an ‘event’ price to see a movie at home when they know full well it’ll be available in theaters for an average price of $5.”

Nevertheless, there are signs that Malone, chief of the country’s largest cable system (13 million subscribers), is preparing a major push to make PPV a way of life. Just last month TCI abandoned its position as the country’s biggest movie-theater chain by announcing it was selling off its 2,400-screen United Artists Entertainment, and word promptly spread that Malone is negotiating a controlling stake in Request TV, the No. 2 PPV network. And last No-vember, TCI purchased 60 million preferred shares in Fox’s parent company, News Corp. Now Fox, despite its film chief’s reservations, is expressing interest in a TCI test this summer of pre-theatrical pay-per-view movie releases, possibly in Denver. The TCI-Fox connection has also triggered Hollywood buzz that Malone and Diller may be hatching a new PPV venture.

Theater owners already are drawing battle lines. ”I would be signing my own death warrant if I let a movie that had played anywhere on pay per view first play in my theaters,” says Sumner Redstone, chairman of Viacom and its 625- screen National Amusements chain.

The future of movies on PPV remains uncertain, but the showdown between theater owners and buccaneering cable upstarts is clearly shaping up as a clash of titans.