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Paramount Seeks $2.3 Million from Blockbuster

7 Apr, 2011 By: Erik Gruenwedel

Warner says its distribution deals expire April 21

With the ink barely dry on Dish Network’s pending $320 million acquisition of bankrupt Blockbuster Inc., Paramount Home Entertainment filed a motion seeking payment of nearly $2.3 million for unpaid physical and digital contracts.

Separately, Warner Home Video, in a filing, said its distribution agreements with Blockbuster expire April 21.

In the April 6 filing with U.S. Bankruptcy Court in New York, Paramount alleges Blockbuster’s proposed cure amounts for unpaid distribution contracts do not reflect reality.

In bankruptcy proceedings, a “cure amount” is the amount the debtor agrees to pay for past-due contracts — a figure that often is significantly less than the original sum owed.

In filings, Blockbuster’s proposed cure amount for physical revenue-sharing agreements and electronic sellthrough, or EST, was zero.

Specifically, Paramount says Blockbuster owes Paramount Digital Entertainment (which assumed control of digital distribution from Paramount Home Entertainment in March 2010) $28,968.67 for EST charges accrued in January — the most recent month of tabulated charges.

Paramount Digital Entertainment claims it is owed another $97,883.14 for “amended” and “restated” services. Paramount Home Entertainment says it is owed $200,550 and $1,964,410 in separate physical rev-share agreements.

Documentation submitted to the court by Steve Sanchez, VP of finance with Paramount Television & Digital Distribution, sheds light on transactional video-on-demand and EST activity (compared with DVD and Blu-ray Disc) for individual Paramount titles from Jan. 1 to Feb. 1.

The studio generated $49,048.74 in revenue from 18,991 VOD transactions, in addition to $14,756.32 from 1,328 EST transactions. The top VOD title was Dinner for Schmucks with 8,207 transactions, followed by Case 39 with 3,993 transactions and Shrek Forever After with 2,322 transactions.

Top EST titles included Schmucks with 212 transactions, Shrek Forever After with 143 and Iron Man 2 with 99 transactions.

By comparison, recent Oscar winner True Grit generated 269 VOD and 12 EST transactions, respectively, notably trailing The Last Airbender (727 VOD/35 EST), The Traveler (635 VOD/18 EST) and How to Train Your Dragon (496 VOD/55 EST).

Paramount’s digital catalog at Blockbuster On Demand includes 359 titles.

Related Links :

Dish Buys Blockbuster: Now What?

Dish Network Wins Blockbuster Auction

Icahn, Liquidator Top Blockbuster Bidding After Day 2

Liquidators Among Blockbuster Bidders

About the Author: Erik Gruenwedel

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