Rupert Murdoch hates them. The home entertainment toppers of the Hollywood studios regard them as a disaster for the DVD business. And they drive video retailers crazy.

But for British newspapers (including Murdoch’s own Times), the blizzard of free DVDs that they have snowed upon their readers this autumn has worked, in the words of one commentator, like “circulation Viagra.”

Every weekend, and some weekdays as well, the newspapers have been handing out titles such as “Paris, Texas,” “The Return of Martin Guerre,” David Lean’s “Great Expectations,” the Alastair Sim version of “Scrooge,” “Rebecca” and “Baghdad Cafe.”

Not the freshest offerings, to be sure, but newspaper buyers don’t seem to care. On a single Saturday in October, the Times added 220,000 sales with “The Last Emperor,” the Daily Telegraph got a 170,000 spike from “Whistle Down the Wind” and the Independent sold an extra 85,000 copies with “Wings of Desire.”

It’s easy to see why the publishers are willing to pay 50¢ (around half their cover price) for the right to give away a movie. And when a well-worn title that only sells in dribbles can earn $350,000 in a single hit, it’s not hard to understand why some indie distribs have been happy to pocket the cash.

But according to Peter Smith, president of Universal Pictures Intl., the effect on the DVD market has been “absolutely brutal.”

“I’ve never seen anything quite as self-destructive as this,” he comments. “As if we haven’t got enough problems with piracy and falling prices, without committing hara-kiri like this.”

And it’s not just happening in the U.K. The German and Polish markets have been equally blighted by newspaper giveaways. German newspapers gave their readers a staggering 36 million DVD movies in September and October.

Back in Blighty, the Daily Mail gave away 6 million kidvid titles in a single week. Over the following fortnight, the preschool DVD market collapsed by 27%.

Some distribs argue that sales of the giveaway title itself actually go up in the few days after the newspaper promotion, because all the advertising prompts some people who missed the freebie to go and buy it.

But critics argue this short-term benefit is outweighed by the long-term damage inflicted upon the perception of what a DVD is worth.

“It’s got out of hand,” admits Michelle Spillane, marketing director of ITV Worldwide, which supplied several old British movies to various publishers.

“If there is a film every weekend in every single newspaper, that’s not helping anyone,” she says. “The retailers are really not happy about it, and we’ve listened to that. We’re not going to supply films any more.”

She says ITV always tried to use the freebies as a sampler for other titles in its library. It gave away a “Carry On” movie, for example, to advertise the launch of the box set. Instead, ITV now will focus on giving away single TV episodes to drive sales of the whole series.

“In the old days, I do believe that we were reaching an audience that weren’t traditional DVD buyers,” she says. “When DVD was still in growth, you were introducing people to the format, but that time has passed now.”

Retailers argue that it’s not even good for the newspapers themselves. A spokesman for the British Assn of Record Dealers says, “From a newspaper point of view, it gives them a one-day hit and then they are back to where they were. In fact it actively encourages disloyalty.”

That certainly seems to be Murdoch’s view, according to his scathing critique of DVD giveaways in a recent interview with the U.K. Press Gazette. The U.S. majors and the British retailers are hoping his comments mark the beginning of the end for the bonanza that newspaper buyers have enjoyed in recent months.

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