Fox Home alleges H'w'd fraud
Company charges H'w'd Ent. withheld profits
Fox went to Los Angeles Superior Court Wednesday to amend an earlier suit, which only accused the retailer of negligence in its disposal of Fox product. The new charges allege that Hollywood, the nation's No. 2 video retailer, misrepresented and concealed facts regarding the sale and rental of Fox videos.
According to the new charges, Hollywood ordered a filter to be installed on its tracking software that would omit any sales transactions on Fox titles within 26 weeks of release to avoid paying the sell-through fees it would have had to pay to Rentrak, and, ultimately, to Fox.
A representative for Hollywood Entertainment said the company couldn't comment on current litigation.
Hollywood execs Doug Gordon and Bruce Giesbrecht are named in the petition as being among those who told representatives of Rentrak that the problem reporting transactions between July and November 1997 had been fixed, with all missing data having been reported.
But it was at the direction Gordon, senior VP of finance at the time, and senior VP of product management Giesbrecht, Fox's new petition alleges, that Hollywood redesigned its computer software twice -- once in July and a second time in November -- to avoid reporting most of its sales transactions to Rentrak and Fox.
The new allegations come seven months after Fox initially filed its lawsuit alleging the retailer had violated its revenue-sharing agreement with Fox and distributor Rentrak, seeking more than $5 million in damages.
In light of the new charges it seeks to bring against Hollywood, Fox said it also hopes to increase the amount of damages for which it is suing the retailer. If the court approves the supplier's petition to amend its initial filing, Fox will ask for at least $30 million in compensatory damages, as well as punitive damages.
A hearing on the motion has been set for March 4.
(Wendy Wilson works for Video Business magazine.)
