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THE MORNING BUZZ: The Morning After

27 Jun, 2002 By: Thomas K. Arnold

Just like that, it's over.

Yesterday's surprise dismissal of the notorious antitrust lawsuit against Blockbuster and the studios certainly stunned independent retailers, many of whom, based on testimony in the 11-day trial, felt the odds were in their favor.

The judge's ruling goes with what studio executives have been saying all along, that the revenue-sharing deals they cut with Blockbuster were available to all retailers and that when you're talking about a level playing field there are myriad other factors to take into account besides price.

But what's legal is not always fair and this case underscores the difference. Testifying under oath, on the witness stand, Blockbuster chief John Antioco may have said his chain did not target independents in its attempts to grow – but the fact is that in a mature industry the only way one player can grow is at the expense of other players. If the pie isn't getting any bigger, he who gobbles up the most slices wins and inevitably someone's going to have to go without.

In this case, Blockbuster's aggressive quest for more market share, which everyone agrees was fueled by direct revenue-sharing deals, sucked the life out of hundreds, if not thousands, of independent retailers. These deals may have been perfectly legal, as Antioco, studio executives and now a judge and at least some jurors, maintain.

But that doesn't diminish the pain of those who were forced out of this business, some of whom lost their life savings trying desperately to stay afloat, to win a battle or at least stave off the enemy despite being outgunned, outnumbered and outmaneuvered.

Actually, the power struggle between Blockbuster and the indies is a microcosm of something that's gone on in America for the last half century – the chaining of the country. Mom-and-pop grocers, hardware stores, dime stores and coffee houses have all been swept off the face of this earth by powerful cookie-cutter chains with names like Von's, Home Depot, Wal-Mart and Starbucks. There's even a Web site, www.newrules.org, devoted to fighting the chaining trend.

Of course, the flip side of this is that even with big corporate support, the chains couldn't have accomplished this industrial genocide without consumer support. Simply put, these chains looked at the business and vowed to do it better. I sorely miss the old coffee house near my home with the mismatched sofas and stacks of dog-eared books and magazines, but the coffee was never anywhere near as good as Starbucks – and I'm so hooked I even buy Starbucks coffee for home use at (sorry, again) Wal-Mart.

I also shop at Von's and Home Depot. Granted, there's no mom-and-pop grocer near me, but there's still a hardware store. I like the guy who runs it, but he can't match Home Depot for selection and price. I'm all for customer service, but even though getting to talk with a clerk at Home Depot is like winning an audience with the Pope, I still shop there.

Just like that, the Blockbuster case is over. But for the independents whosought justice, it was over long before the trial began.

They never had a chance – and I'm not talking about court.



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