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Blockbuster Class-Action Suit Rejected

March 20, 2001|Bloomberg News

A federal judge Monday rebuffed an effort by independent video retailers to launch a class-action lawsuit against Blockbuster Inc., the world's largest video-store chain, over its revenue-sharing agreement with movie studios.

U.S. District Judge Edward Prado in San Antonio found the retailers' lawsuits--which contend that Blockbuster's studio agreements stifle competition in the video rental market--didn't eserve class-action status because they involved dissimilar claims, according to court papers.

The ruling may make it easier for Blockbuster, a unit of media conglomerate Viacom Inc., to fend off independent video retailers' claims that the chain is attempting to drive them out of business with the revenue-sharing arrangement. Single-store owners had sought to bring together the claims of more than 27,000 independent retailers in one suit, according to court documents.

Blockbuster began setting up revenue-sharing agreements with Hollywood studios in 1997 to cut video costs. The Dallas-based company now gives studios a share of its rental revenue in exchange for a lower price for movie titles. That means it can afford to buy more copies of hit films to draw people into its stores, Blockbuster officials say.

But independent video retailers contend in their suits that Blockbuster unfairly teamed with the studios in a bid to dominate the rental market.

Blockbuster's shares fell 49 cents to $13.15 and Viacom's shares rose 75 cents to $46.87 on the New York Stock Exchange.

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SUIT BLOCKED: A federal judge rejected a class-action suit against Blockbuster over its revenue-sharing agreement with movie studios. C7

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