Universal denies Redbox's DVD 'boycott' claim
PHYSICAL: Wholesaler directives weren't 'wrongful,' studio says
By Danny King -- Video Business, 9/1/2009
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The studio's statement was its first since Redbox's 10-month-old lawsuit against Universal was upheld by a U.S. District Court judge two weeks ago.
Universal denied that it threatened to end its relationships with wholesalers VPD and Ingram Entertainment and imposed what Redbox termed an "illegal boycott" in its January amended complaint, according to court filings yesterday. The studio also said it never demanded that retailers Walmart and Best Buy stop or limit the sales of DVDs to Redbox.
"Universal denies that it implemented a 'boycott' or engaged in 'interference' or exerted 'unlawful pressure,'" the studio said in yesterday's filing. "Universal admits that Redbox did not sign the proposed Revenue Sharing Agreement, and that it directed VPD and Ingram no longer sell Universal DVDs to Redbox, but denies this direction was wrongful."
Universal was the first studio to enforce a delay after street date of DVD sales to Coinstar-owned Redbox, which has doubled its kiosk count to about 18,000 in the past year. Since proposing the revenue-sharing agreement last fall and imposing the stoppage of wholesaler sales of its DVDs to Redbox last December, Redbox used so-called "workarounds" with retailers and other sources to get Universal DVDs in its machines.
Upholding Redbox's lawsuit against Universal, U.S. District Court judge for Delaware Robert Kugler granted the dismissal of two of the three counts against Universal in the 10-month-old lawsuit but denied Universal’s motion to dismiss the antitrust claim altogether, according to court records. The two dismissed counts relate to copyright and tortious interference, the latter term implying an attempt to disrupt another party's business relationships.
In its October lawsuit, Redbox said Universal presented the retailer with a “take it or leave it” revenue-sharing agreement that would shrink consumer choice by forcing Redbox to wait until 45 days after street date to rent Universal titles, limiting the number of copies of Universal titles Redbox kiosks could stock and requiring Redbox to destroy DVDs after their rental cycle instead of letting Redbox sell them as used product. In December, Universal filed a motion to have the case dismissed.
In addition to Universal, Redbox has filed lawsuits against Warner Home Video and 20th Century Fox Home Entertainment, both of which are prohibiting the sale of new DVD releases to kiosk operators such as Redbox until at least four weeks after their street date.
Between Sony Pictures Home Entertainment, Lionsgate, Walt Disney Studios Home Entertainment and Paramount Home Entertainment, Redbox has agreements with studios that accounted for about 40% of the U.S. DVD rental market during the first half of the year, according to Rentrak. Warner, Fox and Universal also accounts for about 40% of the rental market.
Redbox last week signed an agreement with Paramount in which its DVDs will be available to Redbox on street date for the rest of the year, with options to extend the agreement over five years.
