July 1, 2009

Paramount in talks to merge DVD ops

U.S. film studio Paramount Pictures is talking with Sony Pictures and 20th Century Fox about merging parts of their home video businesses, sources say.

Citing people briefed on the negotiations, the Los Angeles Times reported Wednesday the merger discussions are being prompted by the ongoing recession, tanking sales of DVDs and the need for studios to cut the costs of DVD production, handling and distribution.

The sources said any merger of the studios' DVD operations would be done as a cost-cutting, rather than revenue-sharing, move, adding Paramount would keep control of its own marketing and promotion of its home entertainment products.

The numbers for DVD sales are grim: First-quarter sales fell 14 percent compared to the year-earlier figure, the Digital Entertainment Group trade association reported.

The Times said top-tier retailers such as Wal-Mart and Best Buy are cutting back on DVD shelf space as consumers opt to rent DVDs from mail-order houses such as Netflix and from supermarket kiosks rather than buy new video discs.