Redbox agrees to settlement talks in Universal suit
Kiosk leader has used 'workaround' agreement for studio DVDs since December
By Danny King -- Video Business, 2/24/2009
FEB. 24 | Redbox and Universal Studios Home Entertainment have notified a U.S. district court that they're willing to start negotiations in an effort to resolve their four-month-old lawsuit.
"Defendants claim they are willing to engage in settlement discussions. Redbox is also willing to appear at an in-person settlement conference, without preconditions, and would accept a Magistrate Judge as a mediator of those disputes if the Court thinks that result is appropriate," wrote George R. Dougherty, an attorney representing Redbox, in a letter filed to the U.S. district court in New Jersey yesterday.
Last October, Redbox sued Universal, alleging that the General Electric unit violated anti-trust laws by insisting on a revenue-sharing agreement with Redbox that, among other things, enforces rental-date and resale restrictions. Universal, which in December filed a motion to dismiss the lawsuit, stopped distributing product to Redbox through Video Product Distributors and Ingram Entertainment on Dec. 1, forcing the largest movie kiosk operator to make alternative arrangements for about 15% of its discs.
Earlier this month, David Cole, CEO of Redbox majority owner Coinstar, said that although the arrangement it made for Universal DVDs wasn't a major disruption to its business, he hoped to "successfully resolve this with Universal."
Coinstar said on Feb. 12 that it would buy the 49% of Redbox that it doesn't own for about $175 million in cash and stock while boosting its expansion plans for the kiosk company.
Universal has declined to comment on the lawsuit.
Redbox, once majority-owned by McDonald's, boosted its machine count to 12,900 from 6,550 last year through agreements with chains such as Wal-Mart and Walgreens and will install as many as 8,000 new machines this year, up from a prior forecast of as many as 6,000 new kiosks, said Coinstar, which estimated last year's same-store sales growth at more than 50%.
