Suit Against Blockbuster Is Dismissed

A federal judge in Texas pulled the plug Thursday on a bitter antitrust case that alleged that video giant Blockbuster Entertainment and five Hollywood studios conspired to drive independent video stores out of business.

In dismissing the case, U.S. District Judge Edward Prado in San Antonio sided with Blockbuster against the three independent video retailers who sued, saying they failed to present sufficient evidence in the 2-week-old trial.

“After listening to everything they had, we didn’t think it was even necessary for us to put on a case,” Blockbuster Chief Executive John Antioco said.

“Their evidence didn’t support the allegations.”

The decision doesn’t bode well for a similar case pending in Los Angeles, and Antioco vowed to try to have that lawsuit thrown out as well.

Plaintiffs’ lawyer Chuck Dorr said the store owners dispute Prado’s ruling, but he stopped short of saying whether they would appeal.

“We were surprised. We were disappointed. We obviously don’t agree,” Dorr said.

At issue had been a revenue-sharing arrangement Blockbuster, part of entertainment conglomerate Viacom Inc., forged with Hollywood studios five years ago. The pact is widely credited with not only revitalizing Blockbuster’s video rental business, but also giving a huge boost to studio video business as well.

Blockbuster bought tapes at discounted rates of about $23 each instead of the traditional price of more than $60 so its stores could stock more copies for video customers who were dissatisfied because the movies they wanted already been rented.

Blockbuster then gave studios a cut of the revenue, saying that the volume of new rentals would more than make up for the price discounts.

Blockbuster and its parent Viacom were accused of pressuring studios into not offering similar deals to independents, something both studios and Viacom Chairman Sumner Redstone denied.

Ironically, the key dispute concerned a format that is fast becoming obsolete as video stores convert to lower-cost DVDs, available for about $18 each. Two studios, Warner Bros. and Metro-Goldwyn-Mayer Inc., were not part of the case because they settled for a reported $15 million combined.

Remaining in the case were the video divisions of Walt Disney Co., Sony Pictures Entertainment, Viacom’s Paramount Pictures, Vivendi Universal and Fox Inc.

Antioco said Blockbuster fought the suit because the company believed it did nothing wrong, and didn’t want any stain on the turnaround it engineered.

“Viacom, Sumner and I are very proud of what we’ve accomplished over the last five years, and we didn’t want any clouds over that,” Antioco said.

Then there is Viacom’s Redstone, one of the most legally tenacious entertainment moguls, who has been known to go to great lengths to fight even the smallest of disputes.

Indeed, Redstone, whose autobiography is titled “A Passion for Winning,” told about 1,000 graduates at Northwestern’s Kellogg School of Management’s commencement Saturday that “it’s not about the money--it’s about winning” and “like it or not, winning is everything.”