Kiosk operator protests 30-day vending window

Redbox has filed a federal antitrust suit against 20th Century Fox because of the studio’s new distribution terms, which would prohibit wholesalers from selling Fox DVDs to the rental kiosk channel until at least 30 days after their initial street date.

The action is “all about our customer choice,” Redbox president Mitch Lowe told Video Business. “We were forced between two choices. One was to delay the release (of Fox DVDs) by 30 days and essentially put our customers behind Blockbuster customers.” The other choice was to raise prices above Redbox’s current $1 per night DVD rental fee, Lowe said.

The suit, filed Tuesday in U.S. District Court in Delaware, charges the studio with copyright misuse, antitrust violations and tortious interference with contractual/business relationships in regard to Redbox’s relationships with wholesalers VPD and Ingram. Redbox is seeking injunctive relief and unspecified monetary damages.

In the action, Redbox alleges that “Fox’s attempt to choke off Redbox’s supply of new-release DVDs follows a failed attempt to require Redbox to end its ‘dollar-a-night’ pricing and to force Redbox to substantially raise its prices to consumers. Redbox refused, and Fox’s boycott followed.”

Fox has directed wholesalers not to sell its new release titles to any vending operator until 30 days after street date, beginning with the Oct. 27 release of “Ice Age: Dawn of the Dinosaurs.”

In a statement, Fox said, “Our desire is to maintain for Fox movies a thriving network of distribution serving all types of consumer preferences, on reasonable business terms for Fox as well as our distribution partners. Fox spent several weeks trying to negotiate a deal with Redbox that offered Redbox varying terms that gave Redbox the option of purchasing DVDs either on the initial DVD release date or with a 30-day window. Unfortunately, Fox and Redbox could not reach agreement. Redbox has now filed a lawsuit challenging Fox’s ability to make business decisions that Fox believes are in its best interest as well as those of consumers..”

Redbox filed a similar lawsuit against Universal Studios Home Entertainment in October after the studio sought to create a “vending rental window” 45 days after a DVD’s general street date. A decision in that case is pending.

Since the rift with U, Redbox has “developed very creative ways to acquire product” released by Universal and will use similar tactics to continue stocking Fox titles, Lowe said. Redbox is protected by the “first sale” doctrine of federal copyright law, which allows a retailer to distribute as it sees fit any legally purchased DVD.  

(Samantha Clark and Marcy Magiera write for Daily Variety sister publication Video Business. Susanne Ault of Video Business contributed to this report.)

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