Redbox 2009 Annual Report Download - page 34

delivery of the DVDs by the “street date,” defined in the Sony Agreement as the initial date on which the movies
are distributed on a rental basis to the general public for the purpose of non-commercial home entertainment
viewing.
Lionsgate agreement
On August 10, 2009, our Redbox subsidiary entered into a Home Video Lease Output Agreement (the
“Lionsgate Agreement”) with Lions Gate Films, Inc. (“Lionsgate”). Redbox estimates that it will pay Lionsgate
approximately $160.0 million during the term of the Lionsgate Agreement, which is expected to last from
September 1, 2009 until August 31, 2014. However, at Lionsgate’s discretion, the Lionsgate Agreement may
expire earlier on August 31, 2011. Of the $160.0 million, approximately $159.5 million is committed beyond
December 31, 2009.
Under the Lionsgate Agreement, Redbox agrees to license minimum quantities of theatrical and
direct-to-video DVDs for rental in each location that has a Redbox DVD kiosk in the United States. Under the
Lionsgate Agreement, Redbox should receive delivery of the DVDs by the “street date,” defined in the Lionsgate
Agreement as the initial date on which the movies are distributed on a rental basis to the general public for the
purpose of non-commercial home entertainment viewing.
Paramount agreement
On August 25, 2009, our Redbox subsidiary entered into a revenue sharing license agreement (the
“Paramount Agreement”) with Paramount Home Entertainment Inc. (“Paramount”) that originally ran from
August 25, 2009, through December 31, 2009 (the “Initial Term”). On December 10, 2009, Redbox and
Paramount agreed to modify the Paramount Agreement to, among other things, extend the Initial Term of the
Paramount Agreement from December 31, 2009 to June 30, 2010 (the “New Initial Term”). During the New
Initial Term and prior to June 15, 2010, Paramount has the unilateral right to extend the term of the Paramount
Agreement to December 31, 2014 (the “Extended Term”). If Paramount does agree to the Extended Term, at
Paramount’s discretion, the Paramount Agreement may be terminated earlier on December 31, 2011. Redbox
estimates that it would pay Paramount approximately $494.0 million during the Initial Term, the New Initial
Term and the Extended Term. Redbox estimates that it would pay Paramount $56.0 million during the Initial
Term and New Initial Term. Coinstar also provided a $28.0 million letter of credit to Paramount, which took
effect October 1, 2009 and terminated January 31, 2010. The letter of credit was replaced with a Coinstar
guarantee to Paramount of up to $25 million.
Under the Paramount Agreement, Redbox agrees to license minimum quantities of theatrical and
direct-to-video DVDs for rental in each location that has a Redbox DVD kiosk in the United States. Under the
Paramount Agreement, Redbox should receive delivery of the DVDs by the “street date,” defined in the
Paramount Agreement as the initial date on which the movies are distributed on a rental basis to the general
public for home entertainment purposes, whether on a rental or sell-through basis.
Subsequent event
Warner agreement
On February 12, 2010, our Redbox subsidiary entered into a rental revenue sharing agreement (the “Warner
Agreement”) with Warner Home Video (“Warner”), a division of Warner Bros. Home Entertainment Inc.
Redbox estimates that it would pay Warner approximately $124.0 million during the term of the Warner
Agreement, which is expected to last from February 1, 2010 through January 31, 2012.
Under the Warner Agreement, Redbox agrees to license minimum quantities of theatrical and
direct-to-video DVDs for rental at each location that has a DVD-rental kiosk owned and/or operated by Redbox
in the United States. Under the Warner Agreement, Redbox will make the DVDs available for rental 28 days
after the “street date,” the earliest date established by Warner on which the DVDs are initially made available on
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