Stupid human tricks
dailynews.yahoo.com
Is this a case of one business unit not knowing what the other is doing ? Hopefully being two days old; it is old news.
Blockbuster, Warner renew controversial video deal
NEW YORK (Reuters) - Blockbuster Inc., the biggest U.S. video rental chain, said Tuesday it has
renewed a multi-year agreement to stock Time Warner Inc. (NYSE:TWX - news) releases at its
stores under a controversial revenue-sharing deal first signed last year.
Under terms of the deal, Blockbuster will rent out VHS movies distributed by Warner Home Video,
Home Box Office, and Turner at its nationwide chain of 6,000 stores.
At the same time, New Line Home Video, also distributed by Warner Home Video, said it has
signed a revenue-sharing deal with Blockbuster.
Under revenue-sharing, video store owners pay a small fee -- around $10 per tape -- to effectively
''rent'' the tape from a studio. Store owners then split the rental revenue with the studio by a
pre-determined percentage.
But the plan, designed to boost rentals by putting more copies of hit movies on retail shelves, has
come under heavy protest from small, independent retailers, who say they do not have the same
access to new releases as big stores with more money.
Revenue-sharing, however, has spurred higher sales for Blockbuster and increased market share of
its parent, Viacom Inc. (AMEX:VIA - news), the company has said. Until mid-1998, Blockbuster
had been one of Viacom's poorer-performing units.
''We are pleased with the results of our original agreement with Warner Home Video and are
delighted to continue this revenue-sharing relationship,'' John Antioco, chairman and chief executive
officer of Blockbuster, said in a statement.
Warner Home Video, the world's leading video distributor with a huge library of films, also praised
revenue-sharing in Tuesday's announcement.
''Revenue sharing, (has) increased inventory levels and revenues,'' said Warren Lieberfarb,
president, Warner Home Video. ''This new agreement demonstrates WHV's commitment to
customer satisfaction with the video rental experience.''
Viacom's stock fell 75 cents to $81.50 in early afternoon trade on the American Stock Exchange,
while Time Warner's stock rose 87.5 cents to $63.81 on the New York Stock Exchange.
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