By Michael White
Jan. 31 (Bloomberg) -- Coinstar Inc., owner of the Redbox movie-rental kiosks, ended its agreement to buy Warner Bros. titles directly from the studio, rejecting a demand to delay access to DVD and Blu-ray discs for two months.
The accord with Time Warner Inc.’s home-video unit expiring today won’t be renewed, Coinstar said in a statement. The Bellevue, Washington-based company said it will get videos from third-party suppliers and make them available as soon as they go on sale.
Coinstar, operator of more than 34,000 rental kiosks, is the second DVD-rental service to reject Warner’s effort to make consumers wait 56 days before renting the latest releases, following Dish Network Corp.’s Blockbuster. Getting DVDs sooner from other suppliers may attract more customers, making up for the higher per-unit prices Coinstar will pay, said Eric Wold, a B. Riley & Co. analyst who recommends buying its shares
“They’ve indicated that they’ve developed a long-term replacement strategy,” Wold said in an interview. “They’ve either got retailers or wholesale distributors who will supply them new releases in bulk.”
Redbox waited 28 days to get videos from Warner under the previous deal. The unit still waits 28 days for DVDs from Comcast Corp.’s Universal Pictures and News Corp.’s Fox.
Blockbuster previously refused to accept the delay, a person with knowledge of the matter said on Jan. 10. Netflix Inc. agreed to it for its mail-order business. Those Netflix customers tend to focus more on older titles, making it easier for the company to wait longer for new films, said Wold, who is based in San Francisco.
“Redbox is all about new releases,” he said. “Waiting two months would definitely hurt their value proposition to consumers.”
The company still waits 28 days for DVDs from Comcast Corp.’s Universal Pictures and News Corp.’s 20th Century Fox. The Universal agreement expires in April of this year. The Fox accord ends in April 2013, Wold said.
Other studios, including Walt Disney Co., Viacom Inc.’s Paramount and Sony Corp., make their DVDs available for rental on the day of release.
Coinstar also said it renewed an agreement with Wal-Mart Stores Inc. to have kiosks at more than 3,700 of the retailer’s locations.
Coinstar fell 0.2 percent to $49.78 at 10:42 a.m. New York time. The shares gained 9.3 percent this year before today.
--With assistance from Edmund Lee in New York. Editors: Anthony Palazzo, John Lear
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by Rich Fiscus
As rumors fly that Warner is trying to delay new releases in Redbox kiosks by more than two additional weeks, one analyst is suggesting they are overestimating their leverage.
The introduction of 28 day delays between the time titles are released for sale and when they are offered for rental is a scheme the studios came up with in 2009. It is intended to be an incentive for consumers to Continue Reading >
“We do not believe that Warner Bros. (or Universal Studios Home Entertainment and 20th Century Fox Home Entertainment) holds all the cards in the DVD agreement negotiations,” Wold wrote. “While Redbox was forced into a workaround two years ago on minimal notice, the workaround plan developed since that time has been developed as a long-term replacement to a studio agreement (with copyright law in the company’s corner).”
Continue Reading >With the rental agreement between Warner and Redbox set to expire Jan. 31, 2012, B. Riley & Co. analyst Eric Wold doubts Redbox management would agree to a 56-day or longer embargo on new-release Warner titles — even with built-in per-unit discounts.
Continue Reading >