Starz Sues Disney Over Movie Downloads

Starz Ent. Llc. filed suit today (Mar. 22, 2007), in Los Angles against Buena Vista Television (BVT), a subsidiary of The Walt Disney Co., for copyright infringement and breach of contract because Disney recently began to sell for transmission over the Internet the same movies that Disney licensed exclusively to Starz. Starz filed the suit in the US District Court for the Central District of California.

Starz claims its agreements with BVT prohibit Disney from selling its films for transmission over the Internet prior to Starz's first exclusive license period and during all of Starz's exclusive license periods.

Yet Disney, the suit states has "begun to sell over the Internet via services like Apple Computer Corp.'s iTunes and (Wal-Mart Corp's) Walmart.com, the very same Disney films licensed to Starz." Over the life of the contract, Starz has paid "over one billion dollars" for periods of exclusive rights to the films.

Starz Ent. ceo/chairman Robert B. Clasen said, "Disney has been a great partner. We hope to continue our relationship. But our agreements clearly prohibit them from selling their movies by electronic download over the Internet while they are exclusive to Starz. If Disney is permitted to violate our contract in this manner, it will undermine the integrity of copyright in general which is a cornerstone of our industry."

Clasen added, "The film studios have been very aggressive, and quite rightly so, in protecting their copyrights, particularly with regard to the Internet. Starz must be equally aggressive in protecting the value of the deal it made. It is especially disappointing to see one of the largest studios ignore so blatantly its own contractual obligations to protect the copyrights it has licensed to Starz."

Disney may distribute its films on a pay-per-view or on-demand basis defined as, "the viewing of a motion picture by a consumer who is charged a fee to view the film over a limited period of time." It also permits home video distribution where consumers may purchase or rent, "a motion picture embodied in a video device which is a physical entity (including, without limitation, video cassette, laser video disc and DVD)."

The suit points out that -- other than these clearly defined exceptions -- the agreements prohibit BVT from licensing its films, "for exhibition in any form of television or electronic delivery."

The suit seeks to stop BVT "from continuing to infringe on Starz's rights" and asks for all profits BVT has realized from its infringing activities.

In response to the suit, BVT issued the following statement, "We believe Starz misreads its agreement with Buena Vista Television and that its claim is without merit. BVT retained and has the right to sell its motion pictures in a wide range of mediums."

Starz Ent. is the exclusive subscription television and broadband provider of first-run films from leading Hollywood studios, including Walt Disney Pictures, Sony Pictures Ent., Overture Films, Revolution Studios, Miramax Films, Touchstone Pictures, Hollywood Pictures, Pixar, TriStar, Screen Gems, Sony Classics and Warren Miller Films. Select first-run theatrical films from The Weinstein Co., IFC and Yari Film Group are also available for subscription television and broadband exclusively on Starz services.

Starz Ent., a premium movie service provider operating in the U.S., offers 16 movie channels, including the flagship Starz and Encore brands with approximately 15.5 million and 27.3 million subscribers respectively. Starz airs more than 1,000 movies per month across its pay TV channels and offers advanced services, including Starz HD, Starz On Demand and VongoSM. Starz Ent. (www.starz.com) is an operating unit of Starz Llc., which is a wholly owned subsidiary of Liberty Media Corp. that is attributed to Liberty Capital Group.

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