Netflix defeated in Relativity Media streaming dispute

Netflix's (NASDAQ: NFLX) exclusive streaming deal with Relativity Media doesn't mean it gets to release two upcoming films from the production company on its streaming service ahead of their official theatrical release, a judge said Friday in a bankruptcy hearing.

The SVOD provider has paid "at least" $283 million in licensing fees to Relativity since 2010 to be the exclusive streaming home for its movies, which include Limitless, Act of Valor, and The Fighter among its past productions, The Wall Street Journal reports.

However, with the studio reorganizing under Chapter 11, Bankruptcy Court Judge Michael Wiles said that releasing two upcoming movies, Masterminds, starring Zach Galifianakis and Kristen Wiig, and The Disappointments Room, starring Kate Beckinsale, on Netflix before they are released in theaters will "threaten the bankruptcy process" because the films might not bring in revenue needed to pull the company out of debt.

Relativity filed for bankruptcy back in July 2015 and the company recently emerged from Chapter 11.

The streaming scuffle is not related to Netflix's initiative to promote same-day theatrical and streaming releases of movies, something it has done with its own original movies. Rather, the two movies in question were scheduled to be released last year in theaters but delayed by the bankruptcy filing, WSJ said in an earlier article.

Netflix argued that its contracts with Relativity were "clear and unambiguous" when it came to streaming release dates for the films. But the studio said that the SVOD provider refused to renegotiate those release dates.

And the dispute may go deeper than that: Judge Wiles said in his ruling last Friday that Netflix's opposition to the studio's reorganization and its attempt to release the films before they're in theaters is really a move to get out of its deal with Relativity. "Netflix waited so that it could interfere with implementation of these arrangements to have leverage to terminate the contract," Wiles said, according to The Wall Street Journal.

Netflix plans to appeal the decision. Meantime, Relativity Media is moving forward with plans to release a total of six films this year, including the two in dispute.

For more:
- see this WSJ article

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