VOD service Intertainer sues studios

Movielink under fire for anti-trust problems

Internet-based video-on-demand service Intertainer has filed an antitrust lawsuit against three major studios and the soon-to-be-launched Movielink VOD service in which they are partnered, alleging that they conspired to deny Intertainer access to first-run movies in order to favor their own service.

In the suit, filed Monday in federal district court in Los Angeles, Intertainer accuses AOL Time Warner (and its studios, Warner Bros. and New Line Cinema), Sony Pictures and Universal Studios of using confidential information gleaned from the studios’ early dealings with Intertainer to help create the Movielink technology. It claims the studios reneged on signed agreements to provide Intertainer with their titles or demanded excessive upfront guarantees and revenue splits in an effort to block competition for their own proprietary service.

The 63-page complaint filed by Intertainer charges the three studio conglomerates with violating the federal Lanham and Sherman Acts, breach of contract and misappropriation of confidential information.

The complaint alleges the studios used purported agreements each had reached with Movielink to raise and fix prices with Intertainer to levels designed to make Intertainer’s service economically unviable and force the company out of business.

“Defendants conspired and combined to fix prices, organized a group boycott of Intertainer, reneged on their licensing agreements with Intertainer and otherwise tried (and continue to try) to destroy Intertainer’s viability,” the complaint says.

Sony is named in the suit, despite being an investor in Intertainer, while other Movielink studio partners such as Paramount and MGM are not named.

As a shareholder in Intertainer, Sony is also charged with breach of its fiduciary responsibility to the company.

“We never had any agreement with Paramount to breach, and MGM didn’t treat us like the others did,” Intertainer CEO Jonathan Taplin said.

Ten unnamed executives are also listed as defendants.

Movielink, Sony and Universal declined comment or did not return calls.

A spokeswoman at Warner said, “As a matter of policy, we don’t discuss matters of litigation, especially those that are ludicrous.”

Movielink probe

The suit by Intertainer comes at a time when Movielink is also being investigated by the Justice Dept. for possible antitrust problems. Taplin confirmed being contacted by DOJ “four or five times” but said he learned nothing from those conversations that is contained in the lawsuit.

The case is reminiscent of a famous suit brought by drive-in chain National Amusements in 1958, then — as now — owned by Viacom chairman Sumner Redstone, against the major studios, in which Redstone made similar allegations of anti-competitive behavior by Hollywood studios, which at the time owned many movie theaters.

That case was settled on terms that allowed National Amusements to obtain first-run movies and eventually grow into the vehicle through which Redstone bought Viacom.

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