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Arbitrator Orders Ventura Audit

8 Sep, 2006 By: Erik Gruenwedel

An arbitrator in Los Angeles has ordered an audit of financially troubled Ventura Home Entertainment, on behalf of plaintiff Zuffa LLC, owner of the Ultimate Fighting Championship (UFC) mixed martial arts branded DVDs.

Ventura Home Entertainment is a wholly owned subsidiary and distribution unit of First Look Studios Inc. First Look acquired Thousand Oaks, Calif.-based VHE earlier this year for about $20 million.

Ventura has marketed and distributed UFC-brand DVDs for several years. Ventura had sought arbitration after Zuffa attempted to terminate its distribution agreement. Zuffa alleged Ventura hid rebates and discounts, charged unauthorized distribution fees and engaged in accounting improprieties. Las Vegas-based Zuffa also claimed Ventura obstructed an independent audit needed to confirm these assertions.

The arbitrator ruled that Ventura had the right to continue distributing UFC product until the case is resolved.

“We are pleased with [the judge's] decision to enforce our rights to an unobstructed and complete audit,” said Kirk Hendrick, COO of Zuffa. “Due to Ventura's hindrance of the audit, we were concerned that sufficient evidence would not be available to terminate the agreement in this arbitration. This decision now allows us to uncover evidence of Ventura's underpayments and accounting improprieties.”

Separately, Ultimate Fighting Productions, LLC, which holds the rights to “The Ultimate Fighter” reality television series, last month sued VHE, First Look Studios and Ventura Distribution for copyright infringement and fraud. That case, filed in the United States District Court, District of Nevada, Las Vegas, is pending.

A representative from First Look Studios was not immediately available for comment.

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