Blockbuster chief, rebuffing critics, denies making unfair deals

LAS VEGAS - Blockbuster Video chief John Antioco insisted his company never made sweetheart deals with studios to give the entertainment giant unfair advantages that would threaten the survival of smaller, independent retailers.

"We have no - none, zero, nil, nada - exclusive deals," Antioco told a crowd of more than 2,000 people Thursday at the Video Software Dealers Association convention. "We have no favored-nation clauses."

Although Antioco's address was received politely by the crowd, the chairman and chief executive of Blockbuster appeared to have done little to quell allegations that the company - in cahoots with studios - is engaging in unfair business practices that threaten to put corner video stores out of business.

"It's good PR, some false information, some spin control," said Roy L. Streit, who with wife Jodie runs three video stores in New Mexico.

But there were none of the boos or catcalls that convention organizers had feared. The head of the video trade group had gone so far as to send a warning for people to behave.

Like other independent retailers, the Streits attended the speech wearing buttons reading: "Independents are Marked for Death" with ribbons saying the independents' trade group was "Out for Justice."

At issue is a jolt in the industry caused by Blockbuster's embrace in the last few months of revenue sharing schemes with studios. The chain now gets movies that used to cost about $70 for as low as $6 in exchange for sharing the rental revenue with the studios.

The deals have been instrumental in the once-moribund Blockbuster's dramatic turnaround in the last year, allowing it to stock more first-run movies because of its lower initial costs for the tapes.

But smaller retailers, claiming studios are giving Blockbuster better terms than they get, are considering legal action alleging antitrust violations.

Hundreds of independent retailers staged a rally Wednesday at a hotel ballroom, where the president of the Independent Video Retailers Group, Bob Webb, pointedly asked: "At what point are we going to say enough is enough?"

The dispute has cast a shadow over the Video Software Dealers Association convention, one of the more colorful meetings in the retail world because of the video industry's diversity.

Convention exhibits include everything from children's videos to hard-core adult lines. It was not uncommon to see scantily clad porn stars stroll past booths with people dressed as beloved children's characters like Casper the Friendly Ghost.

With video sales accounting for more than half of Hollywood studios' film revenues, most of the majors built elaborate displays, led by Paramount's huge mockup of a section of the Titanic to promote the release of the megahit movie in September.

The centerpiece of the show was the address by Antioco, the first-ever by a Blockbuster chief executive before the trade group.

He immediately tried to endear himself to the crowd through humor, walking up to the podium with his right arm appearing to be in a sling. It was a sight gag that played on the morning's first speaker, motivational speaker Dan Clark, who had a broken shoulder. Clark had discussed lessons and inspiration he learned from the recent injury.

"I thought I would try the sympathy routine," Antioco joked.

He told the crowd that the Viacom-owned Blockbuster intended to do its part to maintain the health of the $8 billion video industry, which so far this year has rebounded from last year's slump, and asserted: "No one today can go it alone."

But he made no apologies for Blockbuster's aggressive pursuit of revenue sharing deals, calling them vital to the turnaround of the company that just last year was suffering through declining rentals and dropping membership before Antioco took over.

Without offering details of Blockbuster's dealings with the studios, he contended there was "misinformation" swirling around that Blockbuster had been given deals that other retailers would be denied.

Arguing that "there will always be a need for what independents offer," he said it was vital that the industry as a whole remain strong.

"Our only goal is to increase our sales and profits," he said. "That will be easier ... if our respective businesses are inside a growing industry."

Earlier, VSDA President Jeffrey Eves dedicated his stern speech to a call for unity in the face of growing competition from cable, the Internet and direct-to-TV satellite services.

"Let's not become so blindsided by our internal conflicts that we ignore our biggest competitors," he said.

Still, Antioco said that VSDA would appoint a panel to explore the revenue sharing dispute and make recommendations.

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