Mike Fleming

EXCLUSIVE: In a clear signal that Netflix is preparing for a major expansion into the UK, the streaming company has made what I believe to be its first content deal with a film company there. My sources tell me that Netflix has signed a multi-year exclusive output deal for first pay TV rights with Lionsgate UK. Netflix would not comment, nor would Lionsgate UK, but this pact sets the stage for what will be the first competition that Rupert Murdoch’s Sky has faced in the pay TV movie business in the UK for over a decade.

It is also a deal that gives Lionsgate UK CEO Zygi Kamasa an opportunity to take his company to the next level with a state-of-the-art pay TV deal that will kick in when Netflix opens for UK business. Like Lionsgate in the US, Lionsgate UK is part of the Lionsgate Group, but it operates autonomously under Kamasa, financing film productions and making acquisitions for the UK theatrical and ancillary marketplace. The company’s recent film acquisitions have included The Hurt Locker, The Mechanic and the Ralph Fiennes-directed Coriolanus. Lionsgate UK has also been getting more aggressive in generating British product. It recently completed production on the second film it fully financed, Salmon Fishing in the Yemen. The Lasse Hallstrom-directed film stars Ewan McGregor, Emily Blunt and Kristin Scott Thomas, and it premieres at next month’s Toronto Film Festival.

Netflix has so far announced it will make its first expansion beyond the US and Canada by opening for business in Latin America and the Caribbean later this year. A Netflix spokesman said that until they actually announce expansion plans and output deals, Netflix considers it to be speculation and would not comment on this story. The Lionsgate UK deal is a clear signal that Netflix is ensuring it has content ready for when it makes its UK foray. The Lionsgate Group has a longstanding relationship with Netflix, which includes the Epix multi-platform network.