TELECOM Digest OnLine - Sorted: Wal-Mart Says Not Trying to Fight Movie Downloads

Wal-Mart Says Not Trying to Fight Movie Downloads

Gina Keating, Reuters (
Fri, 22 Sep 2006 23:55:16 -0500

By Gina Keating

Wal-Mart Stores Inc. disputed a report on Friday saying it was trying
to dissuade movie studios from working with other forms of
distribution, such as Apple Computer Inc.'s iTunes.

The New York Post reported that the world's largest retailer had
warned Hollywood it may retaliate against studios for selling movies
on iTunes amid concerns that Wal-Mart's DVD sales will suffer.

Shares of Apple and Walt Disney Co., which this month became the first
Hollywood studio to offer full-length movies on iTunes, both fell more
than 2 percent on Friday.

Some analysts, though, questioned whether concerns about Wal-Mart were
the main contributor to the share price declines. Sanders Morris
Harris analyst David Miller said Disney more likely dropped in
reaction to fears of an economic slowdown, along with the broader

Wal-Mart disputed the Post report and said it was not pressuring movie
studios into shunning online delivery.

"Customers want to watch movies and they want to be able to make the
choice when and how they want to view them," a Wal-Mart spokeswoman

"While we recognize there are various current and potential providers
of this service, we are not dissuading studios from conducting
business with other providers."

Apple and Disney announced plans this month to sell movie downloads on
iTunes. Disney Chief Executive Robert Iger said on Tuesday the company
sold 125,000 downloads, worth $1 million in revenue, from iTunes in
the offering's first week.

A Disney spokeswoman said she was not familiar with the claims in the
Post report. An Apple spokesman could not be reached for comment.

A source familiar with the situation said while big retailers like
Wal-Mart "freaked out" earlier in the year when Disney and other
studios began selling TV shows on iTunes and other Web-based
platforms, they showed no particular concern when Disney became the
first studio to offer movies on iTunes.

The source, who declined to be identified, said the discount retailer
learned over the intervening months that customers who download --
primarily young, single males -- are not the same as those customers
who buy DVDs.

"I don't think Wal-Mart or Target or any of the big box retailers are
nervous," the source said, "because we have had almost a year of
learning and development, and it has proven not to be that threatening."

Iger has repeatedly said digital content delivery platforms such as
iTunes have not cut into DVD retail sales or TV viewership.

Disney shares fell 2 percent to $30.08 on Friday on the New York Stock
Exchange. Apple shed 2.2 percent to $73 on Nasdaq. Wal-Mart shares eased
0.4 percent at $48.29 on the NYSE.

(With additional reporting by Nicole Maestri in New York)

Copyright 2006 Reuters Limited.

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