TNR hires lawyers to advise on Universal terms

Kiosk maker might take action against studio

By Danny King -- Video Business, 10/24/2008

OCT. 24 | TNR Entertainment said it might follow larger competitor Redbox's lead in taking legal action against Universal Studios Home Entertainment’s attempt to create a “vending rental window” 45 days after the standard DVD street date.

TNR, which has about 2,200 The New Release and MovieCube kiosks, hired Houston-based Yetter, Warden & Coleman to advise the company on how to respond to Universal's “take it or leave it” revenue-sharing agreement, which would also force TNR to limit the number of copies of Universal titles it stocks and require TNR to destroy DVDs after their rental cycle. Redbox earlier this month sued Universal for attempting to enforce the agreement.

Redbox earlier this month sued the General Electric unit for attempting to enforce the agreement.

As with Redbox and No. 3 kiosk operator DVDPlay, Universal threatened to stop selling discs to Video Product Distributors and Ingram Entertainment, which distribute discs to TNR, on Dec. 1 if TNR doesn’t sign the agreement.

"We're not going to sit on the sidelines and watch" the Redbox lawsuit play out, said TNR CEO Tim Belton, who added that the company would decide whether to take legal action shortly. "We haven't been able to reach [Universal] to figure out what their business issues are, which is kind of frustrating."

TNR is part of a U.S. kiosk industry predicted to account for an increasing percentage of the movie-rental market, as chain stores cut units. Attracted by movie-kiosk prices that are lower than most in-store movie rentals, U.S. consumers will spend $800 million at kiosks by 2010, triple the amount spent last year, according to Convergence Consulting Group. Meanwhile, store rental revenue, estimated at $5.4 billion last year, will fall to $3.1 billion by 2010, according to Convergence.

Universal has declined to comment on the kiosk agreements.