News Corp. COO says $1-per-night Redbox DVD rentals are ‘grossly undervaluing’ a movie’s worth

On the Call: News Corp. COO Chase Carey

One of the bright spots of News Corp.’s fiscal fourth-quarter earnings results Wednesday was its movie studio segment, which saw revenue rise 13 percent to $1.72 billion despite a profit dip because of some expensive productions.

While U.S. and Canadian box office revenue and attendance are up this year, Hollywood studios appear divided over the growing impact of thousands of $1-per-night DVD rental kiosks run by Coinstar Inc. subsidiary Redbox.

Coinstar said Tuesday it has 17,900 kiosks in the U.S. and expects to add up to 8,500 more this year — nearly one every hour.

Sony Corp.’s movie unit cut a deal last month to supply Redbox with discs in exchange for it destroying the discs afterward, so that cut-rate retail units would not dampen prices.

News Corp. Chief Operating Officer Chase Carey was not so welcoming during a conference call with investors and journalists Wednesday afternoon.

QUESTION: “When you look at what is going on in the home entertainment market on the DVD side, specifically with Redbox and the growth of rental, there seems to be widely differing views among the Hollywood studios. I’m curious how you plan to deal with it, what are you or are not doing with Redbox, and kind of how that evolves?”

ANSWER: “I would say on Redbox, I think it’s a real issue for us. I think having our product rented at a dollar in the rental window is grossly undervaluing it … We are actively determining how do we deal with it.”