updated 11/15/2006 5:40:13 PM ET 2006-11-15T22:40:13

Blockbuster Inc. said Wednesday it has reached a deal for exclusive U.S. rental rights to movies from The Weinstein Co., whose founders created the Miramax studio and sold it to Disney.

The deal will keep all movies from Bob and Harvey Weinstein’s new production company out of the hands of Netflix Inc., the online service that competes with Blockbuster, the nation’s largest movie-rental chain.

Bob and Harvey Weinstein said Netflix had talked to them about a deal. But the brothers, whose Miramax credits include “Chicago” and “Shakespeare in Love,” said they picked Blockbuster because of its combination of stores and online rentals.

Blockbuster Chairman and Chief Executive John Antioco called it the biggest exclusive deal ever in the movie-rental industry. Company officials said they might have had exclusive rights on particular movies in the past, but never with an entire studio.

Antioco declined to say whether Blockbuster is pursuing similar deals with other studios.

A Netflix spokesman said the company had no comment.

The agreement runs from Jan. 1 through 2010 and gives Blockbuster three years of exclusive rental rights to Weinstein movies.

The deal doesn’t cover retail sales of the movies. Antioco said that was “not realistic” given Dallas-based Blockbuster’s limited share of DVD sales.

Blockbuster said it would pay Weinstein a minimum amount based on box-office performance of theatrical releases and production or acquisition costs of direct-to-video movies. Detailed terms were not disclosed.

The companies said the deal would cover upcoming movies including “Bobby,” a biopic about Sen. Robert F. Kennedy that opens this month, “The Nanny Diaries,” starring Scarlett Johansson and Paul Giamatti, and a martial-arts film, “The Protector.”

The Weinsteins said they expected the deal to increase exposure of their movies even though the titles won’t be available on Netflix or at rental stores other than Blockbuster.

Michael Pachter, an analyst at Wedbush Morgan Securities Inc., said other movie producers such as Lions Gate Entertainment Corp. might explore exclusive rental agreements. Such deals could boost studio profits by, in this case, pushing Netflix subscribers to buy the DVD instead of rent it. DVD sales are far more profitable than rentals, he said.

The Weinstein deal isn’t likely to provide a big financial boost to Blockbuster, Pachter said, “but Netflix might be hurt because the kind of movies the Weinteins make are right up Netflix’s alley” — collectible and sometime niche films instead of the kind of mainstream comedies and action flicks that dominate at the box office.

Blockbuster’s revenue in the last full quarter was five times that of Netflix. But Netflix — which doesn’t operate stores — has 5.7 million online subscribers to Blockbuster’s 1.5 million.

The Weinstein brothers founded Miramax, which became part of the independent film movement in the 1990s and produced several high-grossing movies.

The Walt Disney Co. bought Miramax in the early 1990s, but the Weinstein brothers continued to run the studio until last year, when they left to form their own studio after clashing with then-Disney CEO Michael Eisner. Disney kept Miramax’s lucrative film library, meaning that renters will still find “Shakespeare in Love” on Netflix.

© 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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