Gulf War Having Impact on Retailers : ‘The war . . . will hold people’s attention--to the exclusion of regular activities,’ says one executive. Unappealing rental titles are also depressing the market.

The nation’s video retailers report a rental slowdown since the war against Iraq started last week, with horrible business the first few days as people turned to TV in droves for the latest news updates. Though rentals have improved somewhat since then, most of the 30 retailers surveyed said that business was not quite back to normal levels--and may not be any time soon.

“I think the rental business in general is going to suffer for a while because of the war,” said John Thrasher, vice president of video purchasing and distribution for the Tower chain.

The slump couldn’t have come at a worse time for retailers, who were already expecting January to be a slow rental month because of the absence of hot new movies.

“The combination of the war and unappealing rental titles that have limited appeal equals mild business for January,” said Peter Margo, executive vice president of Palmer Video, a 130-store chain headquartered in New Jersey. He said that his chain’s rentals were down 10% last week.

Most retailers reported a resurgence of business last weekend, but what happens now depends on what happens in the volatile, ever-changing Persian Gulf situation.

“As long as the events keep changing radically on a daily basis, the war, naturally and justifiably, will hold people’s attention--to the exclusion of regular activities, like renting movies,” said George Rogers, vice president of the 260-store Wherehouse chain.

Some retailers reported that the war is having an effect on the kind of movies people are renting, with comedies getting more attention than usual.

“Watching a good comedy and laughing is one way to escape the war,” said Brad Burnside, who heads the Video Adventure chain in the Chicago area.

Most retailers said, however, that there has been no increase in rentals of war movies. “People want to forget the war,” said Mark Koblick, who heads Five Star Video, in Berkeley, Calif. “They’re watching the real thing on TV. Who needs a Hollywood version?”

But there were exceptions. Some retailers noted a surge in rentals of Stanley Kubrick’s 1964 “Dr.Strangelove,” a savage anti-war parody about a fanatical general who launches a nuclear attack on the Soviet Union. And Palmer Video’s Margo said that war movies and movies about terrorism “are renting very well. ‘Platoon’ (the 1986 Oscar-winner about the Vietnam War) is doing well again.”

The question retailers are asking now is whether the war will impact two movies due out on cassette next Thursday, Orion’s “Navy SEALS” and CBS-Fox’s “Die Hard 2.”

In the case of “Navy SEALS,” a military action movie starring Charlie Sheen, Orion reports that about 270,000 copies have been sold to retailers--70,000 more than the company had anticipated.

“I bought about 25% more copies of ‘Navy SEALS’ than I originally planned,” Margo said. “Part of that is because of the war. It seems like the kind of patriotic movie people might want to rent.”

Tower’s Thrasher, though, thinks that the retailers who bought extra copies of “Navy SEALS” will regret it. “I can’t see many people wanting to rent a movie that’s like what they’ve been seeing on TV,” he said.

The main movie retailers are counting on to attract renters is “Die Hard 2.” An action/adventure movie starring Bruce Willis, this box-office blockbuster is the major home-video release for the January-February period. But since the villains in the movie are terrorists, will the real threat of terrorism created by the war affect rentals?

Margo predicted not. “I think the terrorist angle will help increase renter interest,” he said.

Thrasher disagreed: “How much are people who are besieged by war and the real threat of terrorism going to want to rent movies about war and terrorism for entertainment? ‘Die Hard 2’ shows terrorists in action. The big question is: How much will people want to mix reality and fantasy?”

CBS-Fox executives were unavailable for comment.