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Lions Gate plays nice with Redbox for $158 million

August 11, 2009 |  2:04 pm

Lions Gate has decided it's better to work with Redbox than against it.

The independent studio has signed a five-year deal to provide its movies to DVD kiosk company Redbox at the same time they are made available to other rental services such as Netflix and Blockbuster. According to a regulatory filing by Redbox's parent company Coinstar Inc., Lions Gate will earn approximately $158 million over the term of the deal.

The agreement, which goes into effect Sept. 1, can be terminated by Lions Gate as early as Aug. 31, 2011 at its discretion.

The Lions Gate deal is similar to one signed by Sony Pictures last month worth $460 million over five years.

While those two studios have decided to cooperate with Redbox, others are trying to undermine the company, which rents out DVDs from kiosks in grocery stores for $1 per night. Universal is in court with Coinstar after last year ordering its wholesale distributors not to give Redbox its DVDs until 45 days after their release. 20th Century Fox last week ordered its wholesalers to do the same, but with a 30-day delay instead.

Both studios are worried that Redbox's cheap offering will undermine more profitable rentals from other companies, as well as lucrative sales. Time Warner Chief Executive Jeff Bewkes recently expressed a similar concern, though Warner Bros. hasn't taken action yet.

Redbox has continued to offer Universal DVDs by purchasing them through alternative means and indicated last week that it would do the same with Fox.

-- Ben Fritz

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