Home Media Magazine - February 10-16, 2008 - (Page 6) NEWS BRIEFS I DEG ADDS 11 MEMBERS, TO HOLD GREEN SUMMIT DEG: The Digital Entertainment Group has added 11 new members. Monster Cable and Diego are now regular members, while Capgemini, Cinram, 3ality Digital, Distribution Video & Audio, Ingram Entertainment, PaperFoam, Media Control GfK, Related Content Database and Simplay Labs join as associate members. This brings DEG’s member total to 60. Meanwhile, DEG will hold a Green Media Summit April 2 to give the home entertainment industry insight on how it can be more environmentally friendly. – Chris Tribbey www.homemediamagazine.com Studios Report Chernin: DVD Won’t ‘Fall Off Cliff,’ Bullish on Blu By Erik Gruenwedel SUPPLIER News Corp. president and COO Peter Chernin said he remains bullish on packaged media despite a slight downturn in filmed entertainment financials. News Corp.’s filmed-entertainment unit reported second-quarter (ended Dec. 31) income of $403 million — the highest among the company’s eight operating segments. The unit, which includes 20th Century Fox Home Entertainment, reported top DVD sales from The Simpsons Movie, Live Free or Die Hard and Fantastic Four: Rise of the Silver Surfer. Leading video-on-demand titles included Night at the Museum and Borat: Cultural Learnings of America for Make Benefit Glorious Nation of Kazakhstan. Last year, filmed entertainment See CHERNIN, Page 28 DVD Drop Sinks Disney Studio Q1 income By Erik Gruenwedel SUPPLIER Strong DVD sales of Pirates of the Caribbean: At World’s End, Ratatouille and The Jungle Book: Platinum Edition couldn’t make up for a 15% decline in The Walt Disney Co.’s studio entertainment firstquarter operating income. Studio income, which includes Walt Disney Studios Home Entertainment, fell to $514 million in the quarter that ended Dec. 29, compared to $603 million last year. Segment revenue was flat at $2 billion. In an investor call, Tom Staggs, senior EVP and CFO, said the decline in studio entertainment was due to tough comparisons with last year, when the quarter included DVD sales of Disney/Pixar’s Cars, Pirates of the Caribbean: Dead Man’s Chest and The Little Mermaid: Platinum Edition. See DISNEY, Page 28 Time Warner Planning Cuts at New Line Unit By Erik Gruenwedel SUPPLIER In his first financial call as CEO, Jeff Bewkes said Time Warner Inc. will immediately implement 15% across-the-board cost cuts, beginning with the elimination of 100 jobs at the corporate level, which he said would save $50 million annually. The cuts come as Time Warner reported a 42% drop in fourth-quarter (ended Dec. 31) net income to $1 billion, from $1.7 billion during the same period last year. Revenue increased almost 2.5%, to $12.6 billion, from $12.3 billion. Specifically, Bewkes said there would be significant cuts at New Line Cinema. The studio has largely had success with independent films, but that was not a prerequisite in the financial “sweet spot” of large studios, he said. See WARNER, Page 28 Gallery to Shutter 400 More Stores By Erik Gruenwedel RETAIL Bankrupt Movie Gallery Inc. will close 400 additional stores and has received approval from the courts for another step toward reorganization. Gallery reported the U.S. Bankruptcy Court of Richmond, Va., had approved a disclosure form regarding the No. 2 video rental company’s fiscal reorganization plan. Dothan, Ala.-based Gallery must now obtain official votes in favor of the plan from its key lenders, which is considered a formality since they last month agreed to support the fiscal restructuring. The approval came a day after Gallery said it will close 400 underperforming Gallery and Hollywood Video stores as part of a second round of store downsizing. The chain last September announced the closure of 520 stores during phase-one restructuring. The new closures, which include 222 Hollywood and 178 Gallery stores, reduce Gallery’s retail footprint to about 3,550 stores. Great American Group, the Woodland Hills, Calif.-based outside professional services company that liquidated defunct Tower Records and Video, will spearhead the sales, which are expected to last from three to seven weeks. Joe Malugen, chairman, president and CEO of Gallery, said the additional closures will help expedite the company’s planned exit from bankruptcy protection in the second quarter. “The decision to close stores is always difficult, but we are confident that we are taking the right steps to emerge from bankruptcy as a stronger company, better positioned for long-term success,” Malugen said. “With the court’s authorization, we can now begin the solicitation of stakeholder votes on our plan, which is another important step forward in our restructuring process.” If its plan is approved, Gallery expects to exit bankruptcy protection during the second quarter. The court will formally consider approval of the plan at a confirmation hearing April 9. I ALLUMINATION IN DEAL WITH TRIFECTA Allumination Filmworks and Trifecta Entertainment will produce and distribute four films together, with the content covering the sci-fi, Western and family genres. – Chris Tibbey I IDEA SEEKS CANDIDATES The Independent Dealers of Entertainment Association (iDEA) is asking its members to nominate candidates for three seats on its board of trustees. The three-year seats will be voted upon in the spring. Nominations are due April 15 and can be e-mailed, mailed or faxed to: Adrian Hickman, TLA Video, 234 Market St., 5th Floor, Philadelphia, PA 19106; e-mail: adrhik@gowebway. com; fax: 215/733-0637. – Billy Gil I MICROSOFT HAS CHEAPER XBOX 360 IN JAPAN With the Xbox 360 struggling to compete in Japan, Microsoft has decided to offer a cheaper, entry-level model there starting March 6. The stripped-down version, which debuted in America late last year, is offered in Japan at the equivalent of $260, about one-fifth less than the current cheapest model there. The same model costs $279.99 in the United States. – John Latchem The Simpsons Movie Pirates of the Caribbean: At Worlds End Netflix CFO Hints at Higher HD Rental Prices By Erik Gruenwedel etflix Inc. CFO Barry McCarthy said the company will consider raising the price for high-def rentals if a clear winner emerged in the format war between HD DVD and Blu-ray Disc. Speaking Feb. 6 at an investor conference in San Francisco, McCarthy said cable channels charge premiums for HD content, a strategy Netflix could emulate once a high-def packaged-media winner was established in the market. “If a winner emerges in that format war and a large percentage of the subscriber base rents HD DVD or Blu-ray … then we will weigh options for increasing price,” he said. “First someone needs to emerge as the winner.” I PORCHLIGHT GETS KIDVID PorchLight Home Entertainment has nailed down the domestic DVD rights to a new children’s program from London-based distributor Cake Distribution. “Loopdidoo,” an animated show for 3- to 5-year-olds, is set to air this spring in the United States on Animania, the children’s channel from the Voom HD networks. – Chris Tribbey N McCarthy said the online DVD rental business has continued to grow despite reports of the decline of packaged media. He said with 100 million DVD players in U.S. households, con- sumption of disc entertainment was not going away. “If you think they are going to stop renting DVDs tomorrow, you really need to lie down until that thought See NETFLIX, Page 12 LOVEFILM ACQUIRES AMAZON EUROPE RENTAL SERVICE By Chris Tribbey I TIVO LAUDS RULING Digital video recording (DVR) pioneer TiVo Inc. said it was “extremely pleased” by the recent unanimous ruling by the U.S. Court of Appeals for the Federal Circuit in Washington, D.C., regarding a copyright infringement suit against satellite provider EchoStar Communications Corp. The court upheld a lower court ruling awarding TiVo $89.8 million in damages against a rival DVR device. – Erik Gruenwedel Amazon.com announced Feb. 4 that its Amazon Europe DVD rental service, which has customers in the United Kingdom and Germany, has been acquired by Lovefilm, one of Europe’s largest online DVD rental operators. “As one of Europe’s largest online DVD rental businesses, Lovefilm is well established to serve customers’ increasing demand for entertainment,” said Greg Greeley, Amazon’s VP of European retail. “Our investment will enable Lovefilm to grow the business further.” Lovefilm CEO Simon Calver said: “Customers are faced with an astonishing array of choices in the entertainment world these days. Lovefilm International will ensure that Amazon Europe’s customers get the best possible DVD rental service. We will be delighted to welcome all Amazon Europe customers to the Lovefilm service.” As part of the agreement, Amazon Europe becomes Lovefilm’s largest shareholder. The companies also have entered into a multiyear marketing agreement. No staff reductions are expected from either company. Home Media Magazine February 10–16, 2008 http://www.homemediamagazine.com http://Amazon.com
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