Paramount Delays Decision on 5-Year Deal With Redbox

Studio extends trial agreement with the $1-a-night DVD rental firm

Last Updated: December 15, 2009 @ 2:23 PM

Paramount has extended its trial agreement to sell DVDs to Redbox until June, effectively putting off a decision to sign a long-term deal with the rental kiosk chain.

The six-month extension essentially renders Paramount a fence-sitter in a dispute between Redbox and some of its studio constituents.

The rental chain, a unit of Coinstar Inc., is currently suing Fox, Warner and Universal, claiming those studios’ decision not to supply it with DVDs violates anti-trust laws.

Officials for those three studios claim that Redbox’s $1 rental price undermines their business model.

Lionsgate and Sony, meanwhile, have both signed long-term arrangements with Redbox, which has quickly grown to have about 21,000 kiosks across the U.S.

Paramount still maintains the option of extending its deal with Redbox until 2014, an agreement the studio projects will generate about $575 million worth of revenue should it be consummated.

However, by waiting until June to sign that longer-term extension, Paramount likely holds out hope that the court-wrangling is settled by then, and it won’t have to enter the fray.