After Electronic Arts (EA) reported strong results for its core game business in 3rd quarter ended Dec. 31, most analysts maintained their bullish take on publisher despite continued losses reported by its online business. EA executives told analysts in conference call after our Wed. deadline that its game based on movie Harry Potter and the Chamber of Secrets for multiple game platforms was performing far better than at least some reports were suggesting (CED Jan 30 p6). Company said it sold more than 9 million units of game across all platforms in quarter. But EA said online version of its successful Sims franchise -- The Sims Online (TSO) -- was performing weaker than expected.
In ruling that could mark end of protracted NextWave litigation, U.S. Supreme Court Mon. upheld lower court decision that reversed FCC on cancellation of carrier’s licenses. Court ruled 8-1, with dissent by Justice Stephen Breyer, that Bankruptcy Code barred FCC from revoking licenses held by bankrupt debtor for failing to make timely payment. Writing for majority, Justice Antonin Scalia said that reading of bankruptcy law didn’t conflict with Communications Act, which he said didn’t require FCC to cancel licenses as penalty for missed payment. “What the petitioners describe as a conflict boils down to nothing more than a policy preference on the FCC’s part,” he wrote.
Independent video dealers suing Blockbuster and 5 major film studios are “manipulating” legal system by pursuing suits with same allegations of unfair trade practices in 2 different jurisdictions, Stacey Dore, attorney for Blockbuster and studios, said last week, asking L.A. Superior Court Judge Victoria Chaney to dismiss case. Suit in Cal. is “coordinated effort” with plaintiffs in Tex."to file multiple lawsuits hoping that they will eventually win,” Video Business quoted Dore as saying. As evidence, Dore pointed to Fairness Alliance of Independent Retailers (FAIR) that filed federal and state suits in Tex. in 1999 alleging revenue-sharing agreements Blockbuster had signed with studios represented unfair trade practice. FAIR also is alleged to have paid legal fees and recruited plaintiffs. Richard Frankel, attorney for rental dealers, countered that FAIR paid just $23,000 in legal fees -- less than 1% of total court costs -- and hasn’t been active in case since 2001. Independents lost case in June when U.S. Dist. Judge Edward Prado, Dallas, dismissed suit, ruling there was insufficient evidence that Blockbuster and studios had conspired to block dealers from getting revenue-sharing agreements. Case is now in 5th U.S. Appeals Court, New Orleans. Warner Home Video and MGM settled federal suit for combined $15 million before start of trial. While Cal. case will cover much of same ground as Tex. action, it has 251 plaintiffs vs. 3 in latter.
RIAA will be hard-pressed to land successor as wired on Capitol Hill as Hilary Rosen, departing as chmn.-CEO at year-end, observers said Thurs. Rep. Boucher (D-Va.), opponent on digital rights, expressed admiration for Rosen’s talents but said next Assn. chief should lead music industry into wholeheartedly embracing Internet by uploading its entire repertoire. However, others said significantly shifting strategy of industry made up of corporate heavyweights was too much to ask of trade association. executive.
In wake of Napster, peer-to-peer (P2P) networks have moved beyond trading MP3 music files into swapping content such as latest Sopranos episode and videogames. Diversity of content not only is driving creation of new P2P Web sites and applications, but also is creating bandwidth, legal and security issues for employers, report by Websense said Thurs.
Verizon Internet Services vowed appeal of decision by D.C. federal court ordering it to comply with RIAA subpoena seeking information on alleged online music infringer as many weighed in with reaction to case that has drawn national attention. Among them was copy protection giant Macrovision, which told Consumer Electronics Daily Wed. it was partnering with Websense to develop content filtering technology that ISPs could use to track and control traffic in unauthorized content transmitted on their networks, possibly absolving them from actions such as that against Verizon.
RIAA denied Tues. its chmn. had proposed charging ISPs fee for file-sharing and demanded correction from Reuters, which Assn. said originated widely reported account. RIAA Chmn. Hilary Rosen spoke Sat. at MIDEM music conference in Cannes, France.
With U.S. Supreme Court expected to rule relatively soon on fate of NextWave’s PCS licenses, some industry observers expect carrier could face challenges linked to drop in wireless spectrum values if court decided against FCC. Several analysts pointed to $750 million Verizon Wireless agreed to pay last month for NorthCoast PCS spectrum, including 10 MHz in N.Y.C., as sign of how far spectrum prices had fallen. Verizon had bid $4.1 billion in Jan. 2001 for 2 10 MHz licenses in N.Y. that since had been returned to NextWave. Others cited 28 of top 30 markets that NextWave spectrum covered, meaning that carriers still could pursue spectrum in market-by-market acquisitions.
CTIA plans to petition FCC next week to seek another delay in implementing wireless local number portability (LNP), Pres. Tom Wheeler said Wed. In July, Commission gave wireless carriers 3rd extension, to Nov. 24, 2003, to provide LNP in 100 largest Metropolitan Statistical Areas. Wheeler cited new CTIA data on wireline rate centers that 90% of time when consumers wanted to keep phone number when switching from wireline to wireless, “they're told to go pound sand.” Point of new challenge to LNP rules, he said, is that they shouldn’t be implemented until “the competition that they claimed they were doing in the first place is made possible by their rules.”
U.S. Supreme Court Justice Sandra O'Connor Fri. lifted temporary stay against Cal. Supreme Court decision holding that out-of-state Internet users who posted information on how to hack DVD copy protections couldn’t be sued in Cal. courts (CED Jan 3 p5). DVD Copy Control Assn. Inc (DVD CCA) applied for stay Dec. 23, saying it was necessary to prevent Matthew Pavlovich -- who would have been dropped from case under state ruling -- from posting reverse-engineered decryption program known as DeCSS (which decodes movies stored on DVDs). On Dec. 26, O'Connor stayed enforcement of state judgment pending receipt of response from Pavlovich. That response, filed last Thurs., contended DeCSS information has been readily available for “at least the past 2 years,” negating DVD CCA’s claims of urgency and possible harm. O'Connor’s reversal is “an important victory for us,” said Allonn Levy, Pavlovich’s attorney. Order is “in line with” what Cal. Supreme Court did when presented expert evidence that DeCSS is both useful and legal, and available online, Levy said. Levy said he expects DVD CCA to petition for certiorari. That’s one option, said DVD CCA attorney Gregory Coleman. Others include suing Pavlovich in Ind. or Tex., or convincing him to commit to “respect our trade secrets.” “We're obviously disappointed,” Coleman told us.