Sony Extends Redbox Distribution Deal For Two Years

Sony had the right to bail out on September 30, but will hang in for two years — with two, one-year options to extend the agreement past 2014 — Redbox parent Coinstar says in an SEC filing this morning. The latest change in their alliance also will give Redbox the option to license Blu-ray discs from Sony. When the companies revised their deal last year, Sony said that Redbox could keep DVDs in its kiosks for as long as a year — twice as long as the studio previously allowed. “With three years of data to analyze, we believe it is a positive sign that Sony has not seen any adverse impact from the Redbox agreement and did not follow Warner Bros’ lead in pushing for a delay,” B. Riley analyst Eric Wold says. Warner wanted its videos to have a 56-day head start on store shelves before hitting the kiosks. Redbox refused, and now buys Warner DVDs from retailers instead of directly from the studio. The extension with Sony should come as a relief to Coinstar. Its stock has declined about 20% since last Thursday, when it disclosed Q2 earnings that fell short of the Street’s expectations. Coinstar shares are up 2.4% in early trading. No word in the filing about whether the new deal might affect Redbox’s planned streaming joint venture with Verizon: to be called Redbox Instant By Verizon.

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