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MGM Will Not Change Distribution

16 May, 2001 By: Joan Villa

After keeping distributors on edge for more than a week, MGM Home Entertainment will make no "substantial" changes in its distribution network at this time.

In a fax sent to wholesalers Wednesday afternoon, MGM executive v.p. of sales Robert Wittenberg thanked them for participating in a series of meetings held the first week in May to demonstrate how they would boost their focus on MGM product.

After calling the process "illuminating," Wittenberg said MGM will not make "substantial changes" now, but would instead conduct "a more thorough reassessment" of distribution at the end of the year.

"A representative from MGM will be in touch with you to further explore specific ways we can grow our business for our mutual benefit," the letter states. "We believe there are opportunities to conduct business in ways more productive than the current approach provides."

The dominant rumor of the last week was that MGM would choose VPD as its sole distributor—a claim denied by both Wittenberg and VPD president Tim Shannahan.

However, such a move would have "opened up a can of worms to be sued," notes one wholesaler who received the letter. Distributors Flash Distributors and ETD initiated legal action against Universal Studios Home Video, Ingram Entertainment and VPD for their exclusive distribution arrangement launched by Universal last October.

"I think distributors feel for the first time they want a battle," he warns. "We’ve been supporting MGM during the last couple years when they haven’t had a damn thing to sell."

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