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Intertainer Sues Major Studios

September 25, 2002|JON HEALEY | TIMES STAFF WRITER

Intertainer Inc., a pioneer in online video on demand, has accused three of the world's largest entertainment conglomerates of conspiring to inhibit competition with their online venture, Movielink.

The antitrust lawsuit against AOL Time Warner Inc., Sony Corp. of America, Vivendi Universal subsidiary Universal Studios Inc. and Movielink is a last-ditch effort by Culver City-based Intertainer, which has been trying to win long-term deals for the studios' movies.

The suit filed Monday in U.S. District Court in Los Angeles reflects the widespread frustration among independent online music and movie companies, which have struggled to win licenses from Hollywood studios and record labels on terms they can afford.

Those complaints persuaded the Justice Department last year to launch antitrust investigations into the major studios and labels, focusing on joint ventures such as Movielink and licensing practices in general. Both investigations reportedly are continuing, but have yet to produce tangible results.

In its lawsuit, Intertainer accused Sony, Universal and two AOL subsidiaries, Warner Bros. and New Line, of raising prices to match what the studios had agreed to pay Movielink. It also alleged that the studios have withheld programming from Intertainer to aid Movielink, which plans to begin service later this year.

The lawsuit accused the studios of price fixing, breach of contract, negotiating in bad faith and unfair competition.

A spokeswoman for Warner Bros. responded, "As a matter of policy, we don't discuss pending lawsuits, especially those that are ludicrous." Universal, Sony and Movielink declined to comment.

Executives at studios and labels have said they're eager to take advantage of the Internet, once they work out new business models and clear the rights to distribute online. Several studios also have complained about the picture quality of online video and the limited protections provided by today's anti-piracy technology.

Backed by Microsoft Corp., Comcast Corp., Intel Corp. and other corporate heavyweights, Intertainer offers entertainment on demand through high-speed Internet connections and digital cable TV systems.

Ironically, the company has been much more successful at winning licenses from major entertainment companies than most competitors, many of which have failed for lack of programming and subscribers.

The handful of survivors include CinemaNow, MovieFlix.com and SightSound Technologies.

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