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Home Video Chiefs First Up In Antitrust Case

6 Jun, 2002 By: Joan Villa


Viacom chairman Sumner Redstone will be the first witness in the trial beginning this week in a closely watched antitrust lawsuit brought by independent video retailers against Blockbuster and five studios.

Jury selection is scheduled to begin 9 a.m. June 12 in U.S. District Court in San Antonio, Texas, followed by opening arguments limited to 90 minutes for each side.

Witnesses will take the stand as early as Thursday, starting with Redstone, whom plaintiff attorneys call “the heart and soul of the case” because the executive met with studios in mid-1997 to ask for revenue-sharing deals for Viacom subsidiary Blockbuster.

Other possible early witnesses include Warner Home Video president Warren Lieberfarb, set to testify on tape, Craig Kornblau of Universal Studios Home Video and plaintiff retailer Ron Cleveland of Lonestar Video in San Antonio.

Studio defendants are 20th Century Fox Home Entertainment, Buena Vista Home Entertainment, Columbia TriStar Home Entertainment, Paramount Home Entertainment and its parent Viacom, and Universal.

Warner and MGM Home Entertainment were removed from the case last month after the two settled for an unconfirmed sum that observers claim is worth more than $15 million. The settlement will be split among the three plaintiffs in the federal action and more than 200 independent retailers in a similar lawsuit underway in Los Angeles Superior Court.

As of press time, there were few new motions filed in court amid rumors of more last-minute settlement talks.

U.S. District Judge Edward Prado ruled last month against several arguments filed by studios or Blockbuster to dismiss certain price-fixing and antitrust claims. Instead, he let stand charges of horizontal conspiracy between studios and vertical conspiracy between studios and Blockbuster.

Studio defendants followed with a new joint motion for partial reconsideration, disputing the judge's ruling that allowed horizontal conspiracy charges, because it makes “economic sense” for the studios to have conspired in creating a market advantage for Blockbuster. As of late last week, the judge has not yet ruled on that motion.

The antitrust charges stem from revenue-sharing deals and other pricing agreements between Blockbuster and the studios beginning in 1997 from which independent retailers were excluded. Plaintiffs have charged that the deals were illegal and let Blockbuster stock vast quantities of new releases and build market share, creating an environment where independents could not compete.

Plaintiffs in the two-year-old federal action are Cleveland, Dave Stevenson of The Big Picture Video in Syracuse, N.Y., and John Merchant of 49'er Video in Sacramento, Calif.


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