Disney Says It Initiated Blockbuster Deal
SAN ANTONIO (Reuters) -- Walt Disney Co. initiated a revenue-sharing deal with video rental giant Block-buster Inc. that has come under fire in federal court in Texas, according to testimony from the Disney chief. In videotaped testimony heard in court on Tuesday, Disney Chairman and Chief Executive Michael Eisner said he recalled that Michael Johnson, then head of Disney's home video business, Buena Vista Home Entertain-ment, came up with the idea, rather than Blockbuster or its parent company, Viacom Inc. "I remember Michael Johnson creating and then advocating a different arrangement where you would have more depth in the video stores and a revenue share," Eisner said. In the taped deposition, Eisner agreed that the home video business was a key profit source for Disney and that the company's revenue-sharing agreement with Blockbuster "turned out to be a successful model". Small independent video store operators have sued Blockbuster, Via-com, and several movie studios, alleging that they conspired to drive the smaller stores out of business. They allege Blockbuster and the studios broke US antitrust laws by signing deals that enabled Blockbuster to obtain large numbers of new video releases at low prices that were not available to independent video rental stores. Dallas-based Blockbuster says the deals, under which it shares a portion of rental revenues with the studios, were legitimate business agreements that laid the foundation for a dramatic turnaround in the company for-tunes in the late 1990s. The case is being heard in US District Court in San Antonio, Texas, and pits three in-dependent video rental firms based in Texas, California and New York, against Blockbuster, the world's big-gest video rental chain with 8,000 stores. During earlier testimony, John Merchant, owner of one of the three small firms behind the suit said he was forced to close four of his five stores in the Sacramento area of Califor-nia after Blockbuster signed the revenue-sharing deals. Under cross-examination by defense attorneys, Mer-chant said the independents could have obtained similar revenue-sharing deals with the studios, but lacked a central computerized distribution center similar to Blockbuster's. Other defendants in the case are home video units of major movie studios Paramount, Columbia Tri-Star, Universal Studios and Twentieth Century Fox.
SAN ANTONIO (Reuters) -- Walt Disney Co. initiated a revenue-sharing deal with video rental giant Block-buster Inc. that has come under fire in federal court in Texas, according to testimony from the Disney chief. In videotaped testimony heard in court on Tuesday, Disney Chairman and Chief Executive Michael Eisner said he recalled that Michael Johnson, then head of Disney's home video business, Buena Vista Home Entertain-ment, came up with the idea, rather than Blockbuster or its parent company, Viacom Inc. "I remember Michael Johnson creating and then advocating a different arrangement where you would have more depth in the video stores and a revenue share," Eisner said. In the taped deposition, Eisner agreed that the home video business was a key profit source for Disney and that the company's revenue-sharing agreement with Blockbuster "turned out to be a successful model". Small independent video store operators have sued Blockbuster, Via-com, and several movie studios, alleging that they conspired to drive the smaller stores out of business. They allege Blockbuster and the studios broke US antitrust laws by signing deals that enabled Blockbuster to obtain large numbers of new video releases at low prices that were not available to independent video rental stores. Dallas-based Blockbuster says the deals, under which it shares a portion of rental revenues with the studios, were legitimate business agreements that laid the foundation for a dramatic turnaround in the company for-tunes in the late 1990s. The case is being heard in US District Court in San Antonio, Texas, and pits three in-dependent video rental firms based in Texas, California and New York, against Blockbuster, the world's big-gest video rental chain with 8,000 stores. During earlier testimony, John Merchant, owner of one of the three small firms behind the suit said he was forced to close four of his five stores in the Sacramento area of Califor-nia after Blockbuster signed the revenue-sharing deals. Under cross-examination by defense attorneys, Mer-chant said the independents could have obtained similar revenue-sharing deals with the studios, but lacked a central computerized distribution center similar to Blockbuster's. Other defendants in the case are home video units of major movie studios Paramount, Columbia Tri-Star, Universal Studios and Twentieth Century Fox.