Dis downloads irk Starz

Suit says iTunes sales violate deal

Starz Entertainment is suing the Walt Disney Co. in federal court over download-to-own ventures it claims violate Starz distribution rights in certain windows.

The suit, filed Thursday in U.S. District Court in Los Angeles, claims Disney has "begun to sell over the Internet via services (including) iTunes and Wal-Mart.com the very same Disney films licensed to Starz." It seeks injunctive relief and also for Disney to turn over to Starz any profit realized on such Internet ventures.

Starz said it secured its rights to the films in pacts with Disney's Buena Vista Television struck in 1993, 1999 and 2005. The company paid more than $1 billion during the periods covered by the pacts, the suit states.

"Disney has been a great partner (but) our agreements clearly prohibit them from selling their movies by electronic download," Starz Entertainment chairman-CEO Robert Clasen said. "The film studios have been very aggressive — and quite rightly so — in protecting their copyrights, particularly with regard to the Internet. Starz must be equally aggressive in protecting the value of the deal it made."

In its suit, Starz acknowledges Disney's right to distribute films via pay-per-view or on-demand if "the viewing of a motion picture (is) a consumer who is charged a fee to view the film over a limited period of time."

Disney also is allowed home entertainment distribution during Starz windows, the suit acknowledges. But it says its agreements with Disney allow only "home video distribution where consumers may purchase or rent 'a motion picture embodied in a video device which is a physical entity (including, without limitation, videocassette, laser video disc and DVD,' " according to the suit.

Except for the stipulated exceptions, those rights do not permit parties other than Starz to distribute the films "for exhibition in any form of television or electronic delivery" during Starz' windows, the suit contends.

"We believe Starz misreads its agreement with Buena Vista Television and that its claim is without merit," Buena Vista Television said in a statement. "BVT retained and has the right to sell its motion pictures in a wide range of mediums."

Starz licenses for pay TV and broadband play first-run films produced by several divisions and affiliates of Disney, Sony and others. It operates 16 movie channels under the Starz and Encore brands.

Since January 2006, Starz has operated the Internet-based service Vongo. For $9.95 a month, subscribers can download any number of more than 1,000 available movies for viewing as many times as desired during the month.

Kimberly Nordyke contributed to this report.
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