Audio Video News

Hollywood studios are going to have to defend their jealously protected distribution systems in an antitrust suit filed in US District Court in Los Angeles.

Online film company Intertainer has charged that three studios, Sony Pictures, Universal Studios, and Warner, have conspired to use their own Internet joint venture, called Movielink LLC, to force up the prices they charge for licensing their movies to other online distributors. Movielink is also backed by Paramount Pictures and Metro-Goldwyn-Mayer, Inc., which aren't named in the suit.

Founded in 1996, and backed by Microsoft, Intel, and NBC, among others, Culver City, CA–based Intertainer was one of the first companies to offer movies on demand over the 'Net, and has always worked cooperatively with film studios to secure offerings for its subscribers. Intertainer charges approximately $4 per film per viewing, but claims in its lawsuit that the film industry's moves to corner the market on distribution of its own products is forcing the cost of each film to over $180. Intertainer has charged the three defendants with a "conspiracy to fix prices, engage in a group boycott, and otherwise unreasonably restrain competition."

Movielink is under investigation by the US Justice Department as part of a larger antitrust investigation of entertainment industry practices that could exclude outside distributors, as in music business–backed downloadable music sites MusicNet and pressplay. Premiere, a premium cable venture in the early 1980s by four film studios, was abandoned after the Justice Department ruled that it violated antitrust law.

Movielink may not have the same objectionable exclusivity, but Intertainer appears to be on solid ground with its suit, in that prices the studios charged went sky-high after a recent revenue-sharing renegotiation. The studios claim that concerns about copyright protection force them to block films from Internet distribution.

US courts have generally agreed that major industries may not simultaneously own both "the water and the pipes to deliver it." That's why auto dealerships aren't owned by Ford, General Motors, and Chrysler Corporation. Suits like Intertainer's may help keep film distribution from becoming monopolized.