CAPSTAR FINANCIAL HOLDINGS, INC. (NASDAQ:CSTR)
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Coinstar Inc.'s (CSTR) Redbox subsidiary allowed a contract with Warner Bros. to expire Tuesday, as the operator of DVD rental kiosks rejected a longer rental delay window the studio says is necessary to ensure a healthy film business.
Greg Cohen, senior vice president of marketing and customer experience at Redbox, said the company would continue to provide Warner Bros.'s films through "alternative means," which suggests Redbox will get the videos from third-party suppliers.
Warner Bros. spokesman Jim Noonan said the company hoped to "continue discussions with Redbox and reach a mutually agreed-upon solution to this situation, but we fully intend to do what is best for our business, our consumers and the industry as a whole."
The contract between Redbox and the studio is expiring weeks after Warner Bros. struck a deal with Netflix Inc. (NFLX), which agreed to wait 56 days after Warner Bros. movies come out on DVD before users can rent them. Warner Bros. also has a 28-day delay window agreement in place with brick-and-mortar locations like Blockbuster LLC. The news had been previously reported by Bloomberg LP.
Warner Bros. in 2010 had imposed a four-week delay on rental outlets but the new delay is seen as a bid to bolster DVD sales. Redbox, which says it maintains working relationships with "every other major studio," said it has four-week delay agreements with Universal Studios, a division of NBCUniversal Media LLC, and News Corp.'s (NWS, NWSA) 20th Century Fox.
News Corp. owns Dow Jones & Co., publisher of this newswire and The Wall Street Journal.
Earlier Tuesday, Redbox said it signed a renewal agreement with Wal-Mart Stores Inc. (WMT) to continue to allow the kiosks to be featured at the retailer's locations nationwide. The first Redbox kiosks were installed in Wal-Mart stores in 2006 and the renewed pact runs into 2015. Wal-Mart has the second most Redbox locations behind drugstore retailer Walgreen Co. (WAG).
Shares were down 0.2% to $49.79 in recent trading.
-By John Kell, Dow Jones Newswires; 212-416-2480; email@example.com