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Antitrust Probe Clears Studios' Online Venture

June 04, 2004|From Times Staff and Wire Reports

Movielink, a video-on-demand service formed by five of the largest motion picture studios, is not undermining competition or causing higher prices for consumers, the Justice Department concluded Thursday.

The studios -- Viacom Inc.'s Paramount Pictures, Time Warner Inc.'s Warner Bros., General Electric Co.'s Universal Pictures, Sony Corp.'s Columbia TriStar Motion Picture Group and Metro-Goldwyn-Mayer Inc. -- began offering the service in 2002, providing movies that people can download on computers.

The Justice Department's antitrust division said it had ended a "substantial investigation" of Movielink and determined that the joint venture wouldn't lead to inflated prices or reduce incentive for studios to make movies available to other video-on-demand services.

"The evidence does not show that the formation of the Movielink venture has reduced competition or harmed consumers," the agency said, adding that it would monitor the industry.

Movielink lets customers rent movies for $1.99 to $4.99, depending on the title. Users can download a film file to computer hard drives and store it for as long as 30 days. Once the movie begins to play, users have 24 hours to finish watching before the file is automatically deleted.

The Justice Department's finding drew catcalls from Jonathan Taplin of Santa Monica-based Intertainer Inc., a defunct video-on-demand service that has filed an antitrust lawsuit against Movielink and three of its founders.

Taplin contended that the studios not only had withheld movies from Movielink's competitors, but they also had raised the prices of new movies on the service.

"This is the Bush administration's going-away present to Jack Valenti," Taplin said, referring to the retiring chief executive of the studios' trade group, the Motion Picture Assn. of America.

The five Movielink participants account for about half the domestic box-office revenue in the U.S. each year.

Times staff writer Jon Healey contributed to this report. Bloomberg News and Reuters were used in compiling it.

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