Analyst: Windows, Not Profit, Key to Pending Redbox Call21 Apr, 2010 By: Erik Gruenwedel
With no distribution agreement in hand the day before the April 22 release of Avatar, Redbox parent Coinstar Inc. will make the impact of a studio-imposed retail window its major focus during the first-quarter financial call April 29, an analyst said.
Eric Wold with Merriman Curhan Ford in New York had predicted that Redbox and 20th Century Fox Home Entertainment would iron out a deal around the retail release of the all-time box office king.
Fox and Redbox remain involved in litigation after the studio refused to distribute new releases to the kiosk vendors on street date. Both parties have subsequently resolved similar issues with other home entertainment industry players, including Fox’s deals with Netflix and Blockbuster, and Redbox inking a pact with Warner Home Video.
Should a deal not be struck, Redbox would have to acquire Avatar through more costly third-party retail channels with limited access to the volume of discs required for successful kiosk vending.
“We do not see any immediate negative implications should Redbox not announce a deal with Fox on or before April 22,” Wold wrote in a note. “However, longer term, we see the negative implications as the cloud of unknown remains over [Coinstar] shares along with management needing to further refine their workaround programs to handle pending consumer DVD demand for the top theatrical studio so far this year.”
Fox, by virtue of Avatar’s theatrical clout, has 25.5% market share of the year-to-date domestic box office.
The analyst said that management discussions regarding DVD turns following the 28-day delay of new release Warner titles and a fee increase on its coin-counting kiosks would supersede actual financial results.
“Both of those actions will be more of a factor on the company’s results for the remainder of 2010 than they were during [first quarter],” World wrote.