Starz sues Disney over movie downloads

Claims Walt Disney allowed other movie download services to sell titles while they were exclusively licensed to Starz cable network.

Liberty Media Holding's Starz Entertainment cable network said on Thursday it is suing a unit of Walt Disney for allowing other movie download services to sell titles while they were exclusively licensed to Starz.

The lawsuit, filed in U.S. District Court in Los Angeles, was brought by Starz against Disney's Buena Vista Television, which this year signed deals to sell movies on Apple's iTunes online store and Wal-Mart Stores' .

According to the lawsuit, Disney is barred under a 2005 licensing agreement with Starz from selling some of its films, such as the blockbuster Pirates of the Caribbean: Dead Man's Chest, for transmission over the Internet before and during a period of exclusivity agreed upon for Starz.

Starz has paid over $1 billion for the exclusive rights to Disney films since 1993, according to the lawsuit. It also has the right to offer the films on its subscription Internet download service, Vongo.

"Our issue is that the contract has a clear prohibition from them doing this and we gave them notice, had a number of exchanges and had meetings and they denied our request for relief," Starz Entertainment Chairman and Chief Executive Robert Clasen told Reuters on Thursday.

"We are absolutely adamant in protecting our contractual rights and licenses," Clasen said.

A Disney representative could not immediately be reached for comment.

Disney Chief Executive Robert Iger has named technology, including the electronic distribution of content, as one of the company's business priorities as it expands in the global marketplace.

Disney was the first major Hollywood studio to offer its TV shows and movies for sale through Apple's iTunes. Disney and the other major studios struck deals to sell movies on the newly launched Walmart.com last month.

Disney Chief Financial Officer Tom Staggs said in December that Disney expects to reap $25 million from movie sales on iTunes the first year of the offering, which began in September of 2006.

Clasen said the lawsuit may seek as damages all revenue collected by Disney, Apple and Wal-Mart for the disputed movie sales.

Shares of Disney rose 0.4 percent, or 14 cents per share, to $35.30 at mid-afternoon. Shares of Liberty Media were down 0.2 percent, or 25 cents per share, at $110.11 on Thursday.

Story Copyright © 2007 Reuters Limited. All rights reserved.

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