Redbox adds to Warner, Fox lawsuits

PHYSICAL: Kiosk operator claims retail interference by the studios

By Susanne Ault -- Video Business, 12/1/2009

DEC. 1 | PHYSICAL: Redbox is arguing that 20th Century Fox Home Entertainment and Warner Home Video are unfairly encouraging Walmart, Target and other retailers to limit DVD sales to the $1 a night kiosk operator.

This accusation is part of Nov. 30 amendments filed in Redbox’s lawsuits against Fox and Warner over the studios’ decision to delay new releases to the kiosk company by four weeks. Although Fox and Warner are not directly distributing titles through wholesalers to Redbox on street date, Redbox believes it is its right to freely buy these titles from outside sources such as Walmart.

However, Redbox claims that it has been told by various chains that it can’t buy more than three copies of any Fox or Warner new release title. Redbox blames the studios for interfering.

“Discovery will show that Fox representatives contacted not only VPD and Ingram, but also numerous other distributors and retailers of DVDs, seeking confirmation that they would agree not to sell new release DVDs to Redbox during the 30-day blackout period,” reads the amended complaint. “For example, Redbox representatives have attempted to purchase new release DVDs from Walmart, Best Buy and Target and have been informed by Walmart, Target and Best Buy that Redbox may not purchase more than three copies of any new release DVD. It makes no economic sense for any retailer to deny sales to Redbox unless it knows that other retailers have also agreed not to meet Redbox’s demand.”

Redbox’s amendment in its Warner suit reads nearly identically.

Warner said it is currently reviewing the amended complaint. The studio continues to believe that it has done nothing wrong with its Redbox business strategies.

“In August, Warner Bros. announced a change in its distribution policies and offered Redbox, and other kiosk rental companies, direct license terms to acquire Warner Bros. DVDs,” said the studio in a statement. “Redbox responded to Warner Bros.’ offer by filing a lawsuit. By transforming a business negotiation into a lawsuit, Redbox hoped to gain leverage at the bargaining table. Warner Bros. filed a motion to dismiss Redbox’s improper and baseless complaint. Now, instead of responding to Warner’s motion on the merits, Redbox has changed its complaint. We will review the amended complaint and take the appropriate action.”

Earlier this year, Redbox filed a similar amendment with its lawsuit against Universal Studios Home Entertainment complaining about DVD purchase restrictions at various chains. However, Universal later denied this accusation by Redbox.