Lionsgate jumps into Redbox deal

Estimates pact could produce $158 mil in revenue

In the second recent deal involving Redbox and a big DVD supplier, Lionsgate has revealed a pact to supply the dollar-rentals king with movie discs simultaneously with other retail outlets.

In a regulatory filing circulated Tuesday, Lionsgate estimated that the deal could produce $158 million in revenue for the U.S.-Canadian mini-major. The Lionsgate-Redbox deal will run from Sept. 1 through August 2014 unless the studio opts out in 2011.

"We chose to be part of the largest growth engine in the business," Lionsgate president Steve Beeks said. "It's a win for Lionsgate and a win for Redbox."

Sony also recently struck a deal to provide DVDs directly to Redbox, which operates a nationwide network of 15,000 rental kiosks. And Disney topper Bob Iger recently revealed for the first time that the studio has had a similar deal with unspecified kiosk-DVD retailers for some time.

In exchange for its product agreements with Lionsgate and Sony, Redbox agreed not to resell old DVDs on the used-disc market -- a practice that's riled studio execs even more than the company's ultra-low rental price. Studio home entertainment execs complain that dollar rentals are starting to reduce consumers' enthusiasm for purchasing DVDs.

A unit of publicly traded cash-machine company Coinstar, Redbox gets DVDs released by most other studios indirectly from wholesalers, to whom it resells used discs.

Universal has ordered its wholesalers not to deal with Redbox within the first 45 days of titles' release dates, a position that's prompted an exchange of lawsuits between Redbox and Universal. Just last week, Fox ordered its wholesalers to stop suppling Redbox with DVDs for 30 days after initial release.
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