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Antitrust Trial Update: Ingram Warns Studios of Rev-Share Impact

20 Jun, 2002 By: Joan Villa

SAN ANTONIO – Jurors in the revenue-sharing antitrust trial heard more from a distributor's perspective today on the deals that were offered to independent retailers.

David Ingram, president of Ingram Entertainment, warned studios their revenue-sharing agreements with Blockbuster were driving many retailers out of business including chains such as Video City and West Coast Entertainment.

“We knew the deal with Blockbuster created an unlevel playing field,” Ingram said in a taped deposition played in U.S. District Court. “Output deals were not available to us and if they were available, they were not practical or profitable for the small retailer.”

In a December 1998 letter, Ingram expressed concern to high-level home video executives that Blockbuster's pricing deals allowing it to stock new releases in depth would hurt the studios in the long run because market share would consolidate in the hands of a few retailers. He said no executives responded in writing, but he received phone calls from 20th Century Fox Home Entertainment head Pat Wyatt, Paramount Home Entertainment chief Eric Doctorow and Warner Home Video president Warren Lieberfarb telling him “Blockbuster caused this whole problem,” he recalled.

Lacking hard evidence, Ingram said his impression from the studios in 1998 was that Blockbuster had cut back purchases to goad lagging studios into revenue-sharing. In Nov 2000 he again wrote to the major studios urging them to offer equitable deals. “Not only do some of our small dealers need help, many of our top dealers had gone away,” he remembered writing. “Their general response was we're sorry the world has changed but it's sort of out of our control. We are responding to competitive pressure.”

Ingram Entertainment has 1,000 stores participating in revenue-sharing “but we are still not on a level playing field,” he said. “We're not having what the Blockbuster deal is. We continue to ask for better deals for our customers.”

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