Disney, Blockbuster end revenue sharing

Vid biz shift from VHS to DVD affects Mouse House/vidtailer agreement

WASHINGTON — Disney has become the first studio to end its video revenue-sharing agreement with Blockbuster.

The news comes less than three months after Blockbuster chairman John Antioco warned studios during a conference call with analysts that unless studios renegotiated the terms, the nation’s largest video retailer would end its rev-share agreements with at least some of them.

The change could result in Blockbuster bringing in fewer nonhit Disney titles for rent and possibly offering fewer copies of new popular pics.

Negotiations between Disney and Blockbuster to reup their deal broke down, the two companies confirmed, after the Mouse House refused to lower minimum revenue guarantees the vidtailer had to meet on all VHS releases that were in place under the old agreement.

Changing market

With the vid biz shifting rapidly from largely rental-priced VHS to sale-priced DVD, Blockbuster wanted greater flexibility in how much it buys in each format. Under the old arrangement the chain had to bring in a minimum number of VHS copies of every title the studio released.

The two have been operating without an overall deal since the old one expired in August. Since then, they’ve continued to share revenue on a title-by-title basis while they tried to reach a new deal. Those efforts have now ended.

Buena Vista is the homevid arm for Disney and Miramax.

Rev-sharing between Blockbuster and the studios began in 1997. Instead of paying $65 upfront for each VHS copy of title, under rev-sharing the vidtailer pays a small upfront fee and then shares the rental coin with the studio.

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