Disney sought vid rev-sharing model
Eisner questioned about 1997 deposition, dinner
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Independent retailers, who brought the antitrust suit against the vid retail giant and several of the Hollywood majors, maintain the converse is true.
Walt Disney Co. chairman Michael Eisner gave a videotaped deposition as lawyers for independent retailers tried to show that problems at Blockbuster in 1997 were serious enough to reach the highest levels of Hollywood.
During his 15-minute deposition, Eisner was questioned about a memo written in November 1997 by Walt Disney Intl. president and managing director Michael Johnson, who was head of Disney's video operations at the time. The memo described revenue sharing, then a radical change in the Blockbuster pricing formula. Eisner testified he had no recollection of having seen the memo but said he remembered Johnson coming to him "and describing the new system for selling videos."
Dinner talk
Eisner also was questioned about a dinner he had with Viacom chairman Sumner Redstone in late 1997 that's described in Redstone's memoir "A Passion to Win." Eisner said he recalled the dinner, the only time he said he's met personally with the Viacom executive, but could not recall the conversation. Redstone, in his book, talks about discussing the Blockbuster revenue-sharing deal with Eisner and wrote that Eisner called it "outstanding" for Disney.
"I'm given credit for every decision in the company, even though 90% of them I don't know anything about," Eisner testified.
When Johnson took the stand in person later on Tuesday, he said the entire industry, not just Blockbuster, was in trouble in 1997. "One retailer in particular was putting Blockbuster on its heels, and that was Hollywood Video," Johnson said. "They were definitely targeting Blockbuster."
Exec claims ownership
Johnson maintained it was Disney that first proposed revenue sharing to Blockbuster.
"In June 1997, we went to meet with Blockbuster and their new management to discuss our views about revenue sharing and how we thought it could help them get out of the quagmire they were in," Johnson testified. Only after that, Johnson said, did Blockbuster propose revenue sharing to the studios in general.
This made Disney the second studio in the case to claim revenue sharing was its idea, not Blockbuster's. In another taped deposition played in court last week, Warner Home Video president Warren Lieberfarb said Warner proposed the concept.
The lawsuit, brought in federal district court by three independent retailers, charges Blockbuster and the studios with conspiring to deny independent retailers access to revenue sharing on equal terms with Blockbuster. Tuesday was the fourth day of testimony.
(Paul Sweeting is a reporter for Daily Variety sister publication Video Business.)
