Redbox reaches home-video deal with Lions Gate

Coinstar Inc.'s Redbox division agreed to pay Lions Gate Entertainment Corp. $158 million over five years to distribute the studio's DVDs in rental kiosks. Redbox is based in Oakbrook Terrace,

The agreement is expected to last from Sept. 1 until Aug. 31, 2014, according to a regulatory filing today from Bellevue, Washington-based Coinstar. Lions Gate, based in Vancouver, may terminate the accord on Aug. 31, 2011, Coinstar said.

The agreement will prevent low-priced, previously viewed DVDs from being sold, Lions Gate President Steven Beeks said today on a conference call. Fiscal first-quarter home- entertainment revenue fell 6 percent to $151 million, Lions Gate reported yesterday.

"We have secured placement for our product in the biggest growth engine in the industry today," Beeks said on the call. "This is a smart opportunity for Lions Gate in the current environment."

Redbox operates kiosks that offer self-service DVD rentals for $1 each in grocery stores and fast-food outlets.

The company said its share of the U.S. DVD-rental market rose to 14 percent at the end of June from 9 percent on Dec. 31. Coinstar gained full ownership of Redbox in February after buying a stake from McDonald's Corp.

Lions Gate, run from Santa Monica, California, fell 15 cents to $6.31 at 4:03 p.m. in New York Stock Exchange composite trading. The shares have gained 15 percent this year. Coinstar, which has climbed 85 percent this year, lost 34 cents to $36.15 on the Nasdaq Stock Market.