Ahead Of The Bell: Redbox Rental Dispute

NEW YORK (AP) — Redbox could enlist one of the major DVD retailers as an ally in its fight with movie studios over the timing of new releases, one analyst says.

In a note to investors Monday, Merriman Curhan Ford analyst Eric Wold suggested the DVD kiosk company could sign a deal with Wal-Mart Stores Inc., Best Buy Co. or Target Corp. to get quicker and cheaper access to new release DVDs.

Studios including Universal Pictures, a subsidiary of General Electric Co., News Corp.'s 20th Century Fox and Time Warner Inc.'s Warner Bros. want at least 28 days before Redbox makes their DVDs available as $1-per-night rentals. They hope such a grace period will help prop up flagging DVD sales at retail stores.

Redbox, a subsidiary of Bellevue, Wash.-based Coinstar Inc. is suing the studios over their attempts to block shipments of DVDs for its kiosks.

In the meantime, the company is buying up new releases directly from retail stores to stock vending machines. The strategy is pressuring earnings because of the cost of buying the movies individually at full price.

Wold said the big DVD retailers could simply boost the volume of movies they already buy through normal channels and sign a deal to funnel titles directly to Redbox in bulk. Films from the three studios Redbox is sparring with accounted for roughly 39 percent of rental revenue in the first half of the year, Wold said, making a potential supply deal "quite valuable" for a retailer.