Starz Files Suit Against Disney Alleging Copyright, Contract Violations

LOS ANGELES, March 22: Starz Entertainment has filed suit
against Buena Vista Television alleging copyright infringement and breach of
contract, citing Disney’s decision to distribute through online retailers the
very same movies it licensed for broadcast to Starz.

Starz maintains that under the terms of the 1993 and 1999
Starz-BVT agreements, extended by BVT in 2005, Disney is prohibited from
selling its films for transmission over the Internet prior to Starz's first
exclusive license period and during all of Starz's exclusive license periods.

The suit, filed in the U.S. District Court for the Central
District of California, claims that despite that contractual stipulation, Disney
has "begun to sell over the Internet via services like Apple Computer
Corp.'s iTunes and [Wal-Mart Corp's] Walmart.com the very same Disney films
licensed to Starz." Such conduct, the suit adds, constitutes "a
blatant breach" of the licensing agreements between BVT and Starz. The suit notes that over the life of
the contract Starz has paid over $1 billion for periods of exclusive rights to
the films.

Starz Entertainment CEO and Chairman Robert B. Clasen said:
"Disney has been a great partner. We hope to continue our relationship.
But our agreements clearly prohibit them from selling their movies by
electronic download over the Internet while they are exclusive to Starz. If Disney
is permitted to violate our contract in this manner, it will undermine the
integrity of copyright in general which is a cornerstone of our industry."

He added, "The film studios have been very aggressive,
and quite rightly so, in protecting their copyrights, particularly with regard
to the Internet. Starz must be equally aggressive in protecting the value of
the deal it made. It is especially disappointing to see one of the largest
studios ignore so blatantly its own contractual obligations to protect the
copyrights it has licensed to Starz."

Clasen pointed out that Starz has been investing millions of
dollars in its Vongo Internet service, which delivers more than 1,000 movies
per month, including Disney fare. "We want to encourage consumers to have
every opportunity to access a wide array of films over the Internet. But we
cannot allow Disney to sell those rights to us on an exclusive basis and then
sell the same rights to other parties."

The suit notes that the licensing agreements do allow Disney
to distribute its films on a pay-per-view or on-demand basis defined as
"the viewing of a motion picture by a consumer who is charged a fee to
view the film over a limited period of time." It also permits home video
distribution where consumers may purchase or rent "a motion picture
embodied in a video device which is a physical entity (including, without
limitation, video cassette, laser video disc and DVD)."

But the suit points out that other than these clearly
defined exceptions, the agreements prohibit BVT from licensing its films
"for exhibition in any form of television or electronic delivery."

The suit seeks to prevent BVT "from continuing to
infringe on Starz's rights" and asks for all profits BVT has realized from
those online film downloads.