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Redbox running short on Fox, Warner and Universal movies, blames retail restrictions [updated]

Redbox machine Redbox is having trouble stocking discs from the three studios it is battling in court -- 20th Century Fox, Universal and Warner Bros. -- and is blaming restrictions from retailers.

The fast-growing $1-per-night DVD kiosk company made the new allegation in amended versions of its lawsuits against Fox and Warner filed this week. The Fox complaint accuses the studio of "tortious interference" and "unfair competition," alleging that it played a role in forcing retailers -- identified in a Securities and Exchange filing released today as Best Buy, Wal-Mart and Target -- to restrict the number of DVDs that Redbox can purchase to as few as three at a time.

Redbox has relied on discs it buys from retailers ever since Fox and Warner instructed their wholesale distributors not to sell DVDs to discount kiosk renters until about one month after they go on sale. Universal did the same late last year. All three studios are concerned that $1-per-night new releases hurting more profitable sales and higher-priced rental.

Redbox has attempted to work around those restrictions by buying DVDs in bulk at retail. As the amended complaint and SEC filing indicate, however, that approach does not appear to be keeping kiosks full.

A spot check today of Redbox's website indicates that new releases from the three studios with which it is feuding, such as Fox's "Ice Age: Dawn of the Dinosaurs," Universal's "Funny People" and Warner Bros.' "Terminator: Salvation" are available in very few or no kiosks in Los Angeles. Meanwhile, popular new movies from studios with which it has deals, such as Paramount's "Star Trek," Disney's "Up" and Sony's "Angels & Demons" are in stock at nearly every Redbox location in the city.

The kiosk company says studio pressure on retailers is one of the causes of that shortage.

"Defendant's intentional interference is evidenced by instances in which retailers have refused to sell DVDs and limited the number of DVDs that they would sell to Redbox personnel," its amended complaint against Fox alleges.

However, a spokeswoman for Best Buy, the nation's largest electronics chain, said it has had a policy for most of 2009 limiting the number of copies of a DVD movie any consumer can purchase to five. There has been no recent change, she said, in response to studio complaints about Redbox.

Representatives for Target and Wal-Mart did not immediately respond to requests for comment.

A Warner Bros. spokesman called Redbox's amended complaint "improper and baseless." A Fox spokesman was not immediately available to comment.

Update (5 p.m.): A Wal-Mart spokeswoman denied that it has placed any specific limits on DVD purchases in response to studio pressure related to Redbox.

"To ensure we provide customers access to the products they seek, from time to time we have placed purchase limits on items to preserve their availability," she said. "That option remains available to store managers, but Walmart at this time has not given direction to our stores to limit purchases of new releases."

A spokesman for Redbox said the company is not sure how the studios have influenced retailers, but stated,"We do know that certain Walmart, Best Buy and Target stores have informed field representatives of Redbox that such stores were limiting sales of new-release DVDs to as few as three copies."

Update (11:45 PM): A Fox spokesman provided the following response:

"Redbox’s first complaint was badly flawed, and that’s why Redbox had to file an amended complaint.  Redbox’s latest try, however, remains both legally and factually insufficient.  This meritless case is still all about Redbox’s refusal to make a business deal with Fox on general terms similar to those agreed to by others in this industry.  In short, Redbox continues to try to win in court what it could not achieve at the bargaining table."

-- Ben Fritz

More coverage of Redbox

Photo: A customer uses a Redbox kiosk in June. Credit: Elaine Thompson / Associated Press

 
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