Paramount extends trial to supply DVDs to Redbox

AP News
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Posted: Dec 14, 2009 1:06 PM

Paramount Home Entertainment and Redbox said Monday that they extended a trial licensing agreement under which the home video unit of movie studio Paramount Pictures is supplying films to the $1-per-night DVD rental kiosk company.

The companies said that the agreement will now last through at least the end of June. This gives Paramount a longer period of time to decide if it wants to lengthen the agreement through December 2014. If it does extend the deal, it has an option to end it early in December 2011.

Los Angeles-based Paramount, which is owned by Viacom Inc., and Redbox, which is a subsidiary of Coinstar Inc., had said in August that they started a trial licensing program under which Redbox would stock its kiosks with Paramount Pictures DVDs on the day they are released for retail sale and rental. That deal was set to expire at year-end.

The agreement came on the heels of similar deals Redbox made with Lions Gate Entertainment Corp. and Sony Corp.

As part of the deal, Paramount was to get detailed DVD rental information from Redbox, which the studio is using to determine the worth of the program. Redbox agreed to destroy any Paramount DVDs it removes from its kiosks.

Bellevue, Wash.-based Coinstar said in a regulatory filing in August that Redbox estimates it would pay Paramount $575 million if the deal runs through 2014. It said that Redbox, which has kiosks at more than 15,000 locations across the country, plans to license and buy DVDs from Paramount that will represent about 18.5 percent of the total discs it licenses and buys this year.

Coinstar shares rose $1.48, or 6 percent, to $26.18, while shares of Viacom dipped 58 cents to $32.02.