Redbox sues Fox Home Entertainment

Suit filed after studio imposes a 30-day delay on DVDs

Redbox, which operates 15,000 DVD-rental kiosks nationwide, said Wednesday that it has sued Fox Home Entertainment in U.S. District Court in Wilmington, Del., for refusing to allow wholesalers to provide Fox discs to Redbox.

The suit is similar to one previously filed against Universal based on restraint-of-trade allegations. Universal has counter-sued in the case, and a court ruling is expected soon.

There was no immediate indication whether Fox would sue Redbox, but the studio issued a statement saying it would prevail in the litigation.

"Fox spent several weeks trying to negotiate a deal with Redbox that offered Redbox varying terms that gave Redbox the option of purchasing DVDs either on the initial DVD release date or with a 30-day window," Fox said. "Unfortunately, Fox and Redbox could not reach an agreement. Redbox has now filed a lawsuit challenging Fox's ability to make business decisions that Fox believes are in its best interest as well those of consumers. This lawsuit aims to limit Fox's ability to make legitimate business decisions, and Fox believes it will prevail in defeating Redbox's meritless claims."

At the heart of both disputes is Redbox's policy of renting DVDs for $1 a night, which some studios suggest is so low it undermines consumers' interest in buying discs.

"Redbox's cornerstone principles include providing customers with a convenient way to rent new-release DVDs at an affordable price," Redbox president Mitch Lowe said. "At the expense of consumers, 20th Century Fox is attempting to prohibit timely consumer access to its new-release DVDs."

Displaying a split in the studio ranks on the issue, Sony and Lionsgate have struck deals to supply DVDs directly to Redbox in exchange for a pledge to limit the resale of used discs, another practice rattling studio execs. Redbox gets much of its inventory indirectly through wholesalers.