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Amazon Blocking Warner Movies Pre-Orders in Latest Feud

Actor Will Arnett attends the premiere of
Actor Will Arnett attends the premiere of "The Lego Movie" in Westwood, California on Feb. 1, 2014. Photographer: Jason Merritt/Getty Images

June 11 (Bloomberg) -- Amazon.com Inc. isn’t accepting pre-orders for Warner Bros. movies on its website, the latest of the online retailer’s contract feuds to spill into public view.

Customers trying to pre-order films such as “The Lego Movie,” “300: Rise of an Empire” and “Winter’s Tale” are instead asked to sign up to be notified when the item becomes available. Digital downloads of the movies are available for purchase through Amazon Instant Video.

The world’s biggest online retailer is seeking concessions from Warner Bros. that would give it more of a margin on sales of DVDs and digital versions of its movies, said a person familiar with the matter, who asked not to be identified because the negotiations are private.

Amazon is already in a standoff with Hachette Book Group over e-book pricing in a tussle that will help determine whether publishers can gain any leverage against the online retailer and biggest seller of e-books. To ratchet up pressure on Hachette, Amazon started delaying shipments and blocking some book pre-orders -- including big-name titles such as “The Silkworm,” J.K. Rowling’s new novel written under a pseudonym.

Consumers First

Contract disputes between a retailer and suppliers aren’t new, yet keeping certain items from consumers as a result of a spat is rarer. Amazon’s strategy contradicts its longtime philosophy of giving customers a simple way to order almost everything online.

In a post last month about its Hachette negotiations, Amazon said it is acting “on behalf of customers” and added that “negotiating for acceptable terms is an essential business practice.”

The discussions with Time Warner and Hachette follow investor pressure on Amazon to become more profitable. The company makes less than 1 cent in profit for every dollar in revenue it generates, as Chief Executive Officer Jeff Bezos spends on fulfillment centers, grocery delivery and new products like the smartphone it’s expected to unveil at an event in Seattle next week. Amazon has argued the investments will pay dividends in the years ahead.

Warner Bros. also has a number of popular films coming out for home viewing, including “The Lego Movie,” which has drawn in over $462 million in box office sales worldwide, according to research firm BoxOfficeMojo.com

Keith Cocozza, a spokesman for New York-based Time Warner Inc., the owner of Warner Bros., declined to comment. Representatives for Seattle-based Amazon didn’t immediately respond to requests for comment.

Amazon shares rose less than 1 percent to close at $335.20 in New York.

To contact the reporter on this story: Edmund Lee in New York at elee310@bloomberg.net

To contact the editors responsible for this story: Sarah Rabil at srabil@bloomberg.net Pui-Wing Tam, John Lear

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