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THE MORNING BUZZ: Blockbuster, Studios Stuck to Their Guns in San Antonio

28 Jun, 2002 By: Kurt Indvik

U.S. District Judge Edward Prado surprised plenty of industry onlookers last week in dismissing the antitrust trial in San Antonio after the plaintiffs in the suit had presented their case.

Already plaintiffs' attorneys have vowed an appeal and have set up a conference with the judge overseeing a related suit pending in Los Angeles.

If last week's ruling by Judge Prado was a surprise, the events leading into the trial made it surprising that a jury was even empaneled, but not because of a lack of evidence on the plaintiffs' part, as Judge Prado ruled last week.

Indeed, the position I took in an editorial the week of June 2, when I opined that even if the trial were to actually start it would never reach a verdict, was based on the fact that the early consensus was the defendant studios and Blockbuster would strike settlements with the three independent retailers suing them.

The feeling at the time was the momentum from the recently announced settlements by two of the defendant studios — Warner Home Video and MGM Home Entertainment —would lead to a domino effect, with the remaining five studios and Blockbuster also seeking deals, perhaps even before the gavel sounded on the first day of trial and certainly before a jury ever began deliberations.

As Judge Prado tossed out various motions of summary judgment by the defendants leading into the trial, it looked more and more like the pressure to settle would be very powerful, indeed. Well, Blockbuster and the remaining studios in the case obviously felt they had enough going for them collectively to make a stand.

During the trial, Blockbuster and the studios had been adamant in their positions that the revenue-sharing deals Blockbuster got from the studios were not coerced, were not discriminatory to independents and were only one part of a multipart strategy to improve the financial prospects of the big chain as it struggled for profitability.

For the plaintiffs' part, they hammered away at how the studios may have colluded with each other in dealing with Blockbuster (the Disney documents in Fox company files, etc.), how Blockbuster may have pressured some studios to take revenue-sharing terms by cutting back on buys, how Big Blue's per-unit cost advantage over other retailers gave it copy-depth advantages that hurt smaller independents and propelled its market share to new heights, and how similar deals were never offered to other retailers.

It's been quite a battle in San Antonio; now on to Los Angeles.

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