Clasen: Apple TV at Heart of Disney Suit
By Todd Spangler -- Multichannel News, 3/23/2007 1:48:00 PM
Starz Entertainment CEO Bob Clasen said the arrival of Apple TV was the straw that broke the camel’s back in his company’s simmering dispute with Disney.
Starz Thursday filed a federal lawsuit against Disney’s Buena Vista Television unit, alleging copyright infringement and breach of contract. According to the suit, under agreements the two companies signed in 1993 and 1999 and extended in 2005, Disney is prohibited from selling its films for transmission over the Internet outside of the window of Starz’s exclusive license period.
Disney sold the same movies licensed to Starz via Apple’s iTunes and Wal-Mart Stores’ video-download site, constituting “a blatant breach” of those licensing agreements, Starz claimed in the suit.
In an interview, Clasen said Starz contacted Disney immediately after the studio struck the iTunes deal and repeatedly tried to reach an agreement with Disney. “We sent them a cease-and-desist letter … We made proposals to settle,” he added. “But they just won’t talk about it. We had no choice” but to sue.
For Clasen, the coup de grâce was the arrival of Apple TV, a $299 device Apple began shipping last week that will play iTunes content on big-screen TVs. The ability to watch Disney movies like Cars and Pirates of the Caribbean: Dead Man's Chest on TVs “goes to our core business,” Clasen said. Getting those movies on Starz’s cable channels “is what our core subscribers expect.”
In response to the suit, BVT said in a prepared statement: "We believe Starz misreads its agreement with Buena Vista Television and that its claim is without merit. BVT retained and has the right to sell its motion pictures in a wide range of mediums." BVT handles TV-distribution agreements for Disney’s film titles and other programming.
Starz also has its own Internet-movie service, Vongo, which, for $9.99 per month, provides unlimited viewing of a library of movie rentals -- the same titles Starz shows exclusively on its linear cable channels.
Starz typically negotiates exclusive rights to run movies on TV for a certain period of time nine months after their theatrical release, and it said its contracts include provisions that guarantee that Starz is the sole Internet distributor for a studio’s movie (excluding pay-per-view services).
To date, Starz claimed that it has paid more than $1 billion for periods of exclusive rights to Disney films. The suit, filed in the U.S. District Court for the Central District of California, seeks to bar BVT “from continuing to infringe on Starz’s rights” and asks for all profits from its “infringing” activities.
Clasen declined to put a figure on the damages Starz is asking for. He noted, however, that Disney has said that it expects to reap $50 million in the first year of its iTunes partnership.
Starz’s current deal with BVT runs through 2010. At the end of 2007, BTV has an option to renew the contract another three years.
It wasn’t the first time Starz has sued Disney: In January 2004, the pay TV network sued Disney over its plans to rent movies on the over-the-air MovieBeam rental service. But MovieBeam foundered, and the suit was abandoned.
Earlier this month, video-rental chain Movie Gallery acquired MovieBeam for what it said was less than $10 million.
No related content found.
Featured Company
-
Telestream
Telestream products are used by the world's leading media and entertainment companies and corporations for transcoding and workflow automation. Telestream helps customers transform their media for multiplatform distribution to web, mobile, DVD, cable VOD, podcast and broadcast pl..more
VIEW ALL GALLERIES
