Universal Demands Blockbuster Pay for Discs23 Feb, 2011 By: Erik Gruenwedel
Universal Studios Home Entertainment has joined a growing list of studios demanding immediate payment from Blockbuster for unpaid movie titles shipped to the bankrupt rental icon.
The studio joins 20th Century Fox Home Entertainment and Summit Home Entertainment which are seeking past-due payments for rental disc shipments.
Dallas-based Blockbuster, which put itself up for auction/sale Feb. 21, is slated to begin the expedited bidding process March 2. Meanwhile, Home Media Magazine has received emails regarding increased Blockbuster store closures, diminished new shipments, unpaid payroll and leases.
Universal, in a Feb. 22 filing with U.S. Bankruptcy Court in New York, said it is owed more than $720,000 in the short-term for disc shipments of Charlie St. Cloud and Scott Pilgrim vs. the World, which were due Feb. 6.
The studio said it is now aware that Blockbuster will not be paying for shipments of 10 other Universal titles, including The Kids Are All Right, Curious George TV, Despicable Me, The American, Devil, Nanny McPhee Returns, Catfish, Death Race 2, It’s Kind of a Funny Story and My Soul to Take.
Universal said it is owed more than $13 million when factoring in aforementioned shipments and those that will come due shortly. Total disc shipments exceed 2.5 million units. In addition, Universal said it has a revenue-sharing agreement (signed Nov. 2, 2010) estimated to generate about $25 million in revenue, for which it has been paid $1.1 million.
Universal, along with other studios, signed post-petition (after bankruptcy) agreements with Blockbuster when it was assured the company would pay for new product shipments in a timely manner in part with funds from its $120 million debtor-in-possession, or DIP, financing vehicle.
“In effect, [Blockbuster is] attempting to make USHE their DIP lender, without providing any adequate protection to USHE for the decline in value of its leased titles, while keeping their actual DIP financing at a zero balance,” Universal wrote in the complaint.
Blockbuster claims its debt holders, which control the DIP credit facility, ordered it to stop payments.