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Hollywood Studios Said to Study 60-Day Ban on DVD Rentals

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Oct. 27 (Bloomberg) -- Some of Hollywood’s largest movie studios may seek to double a 28-day delay on DVD rentals by services including Netflix Inc. and Coinstar Inc., four people with knowledge of the situation said.

Executives are discussing increasing the wait to 60 days from the time DVDs go on sale and haven’t made any decisions, said three of the people, who weren’t authorized to speak publicly. Kevin Tsujihara, president of Warner Bros. Home Entertainment, told the Financial Times yesterday the studio wants to lengthen the current 28 days.

Studios are searching for ways to bolster DVD sales and purchases for online viewing, in part by postponing the availability of newly released DVDs for rent or by subscription. Rich Greenfield, an analyst with BTIG LLC in New York, said in a note today a longer wait is a good idea.

“A 28-day window is simply not long enough to shift consumers fast enough to higher-margin” video-on-demand rentals and purchases, Greenfield wrote.

Coinstar, operator of the Redbox DVD kiosks, will continue to work with studios, Chief Executive Officer Paul Davis said in an interview. Providing access to rental and for-sale customers on the same day is the best for consumers, and the company has the option of buying DVDs elsewhere, he said.

“Some studios want a window and we try to work with them,” Davis said. “There’s a point to where it might not make sense.”

Shares Fall

Coinstar, based in Bellevue, Washington, fell 9.9 percent to $47 in extended trading after saying it will raise DVD prices 20 percent to reflect rising debit-card fees. The company’s forecast of fourth-quarter profit also fell short of analysts’ projections. The shares fell 2.3 percent to $52.95 in regular trading. Netflix climbed 1.8 percent to $80.86 at the close in New York.

Joris Evers, with Los Gatos, California-based Netflix, didn’t immediately respond to an e-mail seeking comment.

Warner Bros. said yesterday it won’t supply the latest DVDs to Dish Network Corp.’s Blockbuster chain after the two sides clashed over a 28-delay on new-release rentals sought by the Burbank, California-based studio, part of Time Warner Inc.

U.S. DVD sales fell 5.8 percent to $16.3 billion last year including Blu-ray, according to data from Bloomberg Industries. Home Media Magazine reported in a Sept. 23 story that Warner Bros. was considering a 60-day delay.

Warner Bros., Comcast Corp.’s Universal Pictures and News Corp.’s Fox already impose a 28-day rental moratorium on Netflix and Coinstar Inc.’s Redbox.

Coinstar reported earnings after markets closed. Third-quarter net income rose 90 percent as the company gained customers defecting from Netflix over a recent price increase.

To contact the reporters on this story: Ronald Grover in Los Angeles at rgrover5@bloomberg.net; Michael White in Los Angeles at mwhite8@bloomberg.net

To contact the editor responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net

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