News Corp.'s negotiations to acquire troubled Metro-Goldwyn-Mayer Inc. have reached an impasse over the deal's nondisclosure agreement, according to a person close to the negotiations who requested anonymity.

MGM has an unusually restrictive nondisclosure clause that executives at News Corp.'s Fox Studio felt would place the company at risk if they signed it, the person said.

Fox is interested in MGM's valuable 4,000-title film library, which includes the well-known James Bond and "Pink Panther" series. News Corp., or any other buyer, could make new installments of these series. The studio also has an interest in the forthcoming "Hobbit" movies that will be produced by "Lord of the Rings" director Peter Jackson.

MGM, once one of the premiere studios in Hollywood, has released only one film this year: a remake of the 1980s dance film "Fame," which was a box office disappointment.

This summer, MGM Chief Executive Harry Sloan was ousted from the debt-ridden independent studio and replaced by Stephen F. Cooper, a restructuring expert who previously led Enron Corp.

In November, the studio reached an agreement with lenders to forgo interest payments on its crushing $3.7-billion debt until Jan. 31. MGM is trying to restructure its debt to avoid bankruptcy.

-- Dawn C. Chmielewski, Ben Fritz and Claudia Eller

Universal Pictures confirmed today that it has tapped Debbie Liebling as its new president of production. Liebling succeeds Donna Langley, who was promoted to co-chairman of Universal in October alongside chairman Adam Fogelson. Liebling will begin her new gig in January after relinquishing her current job as executive vice president of production at 20th Century Fox, where she has worked since 2002.

At Fox, Liebling was best known for overseeing comedies such as "Dodgeball" and Sacha Baron Cohen's "Borat," but was less successful when she moved over to the studio's genre label Fox Atomic, which was shuttered after a two-year run.

Now, Liebling and her new bosses will be under enormous pressure to prove they can turn around the box office fortunes of Universal, which is coming off one of its worst years with such costly misfires as "The Land of the Lost," "Funny People" and "State of Play."

The production team and its boss, Universal Studios President Ron Meyer, are under close scrutiny by corporate parent NBC Universal and its owner-in-the-wings Comcast Corp. to see how the studio will perform in the coming year.

--Claudia Eller

Twentieth Century Fox has confirmed the widely expected promotion of studio veteran Emma Watts to president of production.

For two years Watts had shared the job with Alex Young, who left last month to become a producer at the News Corp.-owned studio. Watts' contract has been extended for a few years.

Watts joined Fox in 1998 as a creative executive, working her way up to executive vice president and then co-president. Earlier in her career, she worked at production companies founded by director Oliver Stone and hip-hop mogul Russell Simmons.

The 11-year Fox veteran is currently overseeing such movies as "Date Night," starring Tina Fey and Steve Carell; the family comedy "Tooth Fairy," headlined by Dwayne Johnson; and Oliver Stone's "Wall Street 2," teaming Michael Douglas and Shia LaBeouf.

-- Claudia Eller

Photo: Emma Watts. Credit: Twentieth Century Fox

Emma Watts has emerged as the sole president of production for 20th Century Fox after sharing the job with Alex Young for two years.

Young vacated his post this week after the partnership between them fizzled and will become a producer at the News Corp.-owned movie studio. Watts, a 10-year veteran of the studio, is a homegrown favorite of Fox chairmen Tom Rothman and Jim Gianopulos and will continue to report directly to them.

Both Watts and Young's contracts were set to expire early next year, according to a person familiar with the situation. Watts is now poised to see her contract extended, although that deal has not yet been done, which means the executive could next year choose to entertain offers from rival studios.

Watts has risen through the ranks at Fox since joining in 1999 as a creative executive, the lowest rung on the studio roster above assistant. She worked her way up to executive vice president before becoming co-president two years ago. She previously worked for production companies owned by hip-hop mogul Russell Simmons and director Oliver Stone.

Her elevation continues a trend at Fox of promoting from within for top production posts. Vanessa  Morrison, who heads the studio's animation division, is also a veteran who started in 1995. Elizabeth Gabler, president of the Fox 2000 division, joined the studio in 1988 and took her current job in 1999. Stephen Gilula and Nancy Utley, presidents of specialty film label Fox Searchlight, joined the studio in 2000 and 1986, respectively.

Young was the newest hire among the studio's top production executives, having joined in 2002 after leaving Paramount Pictures.

 -- Ben Fritz and Claudia Eller

20th Century Fox asked a federal district court in Delaware to dismiss the civil suit brought by Redbox, claiming that the antitrust claims raised by the maker of DVD-rental kiosks don't hold up under scrutiny.

Redbox sued Fox on Aug. 11 after the studio asked DVD wholesalers to wait 30 days after a new release before selling to the kiosk operator, putting it at a disadvantage compared with other rental outlets. 

In documents filed Thursday, Fox picked apart Redbox's lawsuit, saying it failed to show how the studio's new approach to kiosks injured competition for DVD rentals. It notes that Redbox struck distribution agreements with three competing Hollywood studios -- Sony Pictures Home Entertainment, Lionsgate and Paramount -- that together represent more than 45% of the DVD market.

 "Redbox does not, and cannot, allege that Fox's distribution policy has any effect at all -- let alone an anti-competitive effect -- on the retail rental of DVDs from the many other studios that compete with Fox," the studio wrote in its filing. "Rather, Redbox only alleges that Redbox and its customers will be inured because Fox's distribution policy allegedly 'prevent(s) customers from renting new release Fox DVDs from Redbox and other rental kiosks."  

Fox also says Redbox hasn't been precluded from buying newly released DVDs -- only that the DVDs can't be obtained through normal wholesale channels. The vendor could obtain movies from retailers such as Best Buy and Wal-Mart or from Fox directly.

"Absent factual allegations that Redbox is foreclosed from obtaining Fox DVDs, Redbox cannot assert that it has been injured -- let alone that market-wide competition is injured," it said.

Redbox issued a statement saying it is confident in its legal position and the merits of its case.

"20th Century Fox continues its pursuit to prohibit consumer access to new release DVDs at affordable prices," the company said. "Redbox remains steadfast in our commitment to protecting consumers’ rights and to providing our customers the DVDs they want, where they want and at the low price they want."

-- Dawn C. Chmielewski

Photo: Redbox DVD rental kiosk. Credit: Justin Sullivan / Getty Images

Related stories:

Fox imposes 30-day wait for DVD rental kiosks

Warner takes aim at Netflix and Redbox

Paramount gives Redbox a spin

Lions Gate cuts deal with Redbox

Start popping the popcorn: AMC Entertainment, the nation's second-largest theater operator, is moving back to Hollywood.

The Kansas City, Mo., chain, which operates 307 theaters, said Thursday it will open a new film office in Century City to strengthen its ties to the studios and develop alternative entertainment, such as live broadcasts of sporting events. The company had closed its film office in 2005 in a company-wide consolidation.

"We are pleased to reestablish a physical presence for AMC's film team in L.A.," said AMC Chief Executive Gerry Lopez. "The addition of new talent and the relocation of key AMC film associates will re-energize our strong industry relationships, which are integral to our programming expansion strategy."

Robert J. Lenihan, president of programming, will oversee the new office with a staff of five in Los Angeles. The new office will be close to one of its flagship theaters, AMC Century City 15.

In February, AMC tapped Lopez, a former Starbucks Corp. executive, to become chief executive. He replaced Peter Brown, who retired after the privately held company sustained heavy losses  and dropped plans for an initial public stock offering. AMC and other theater chains have been enjoying a strong year at the box office but face long-term challenges to boost attendance and draw younger audiences.

-Richard Verrier

DVD rental company Redbox Automated Retail has sued 20th Century Fox Home Entertainment over its attempts to keep newly released titles from appearing in the $1-a-night vending kiosks for 30 days.

The lawsuit, filed Tuesday in Delaware federal court, alleges that Fox is seeking to eliminate competition in the market for newly released DVDs. The civil suit accuses Fox of using its power to "unlawfully coerce" wholesalers, Video Products Distributors Inc. and Ingram Entertainment Inc., as well as other distributors, not to sell newly released DVDs to Redbox after Oct. 27.

The suit charges that such actions constitute an abuse of Fox's copyright and "naked restraint of trade."

“Redbox’s cornerstone principles include providing customers with a convenient way to rent new release DVDs at an affordable price,” said Redbox President Mitch Lowe in a statement. “At the expense of consumers, 20th Century Fox is attempting to prohibit timely consumer access to its new release DVDs at Redbox retail locations nationwide."

A spokesperson for Fox could not be reached for comment.

Battle lines over Redbox are being drawn throughout Hollywood, as the independent studio Lionsgate Entertainment joined Sony Pictures in agreeing to provide movies to the kiosk operator, which has a network of more than 17,000 refrigerator-sized vending machines in grocery and convenience stores and major retailers, such as Wal-Mart. 

Universal Studios Home Entertainment was the first to instruct wholesalers to stop selling newly released DVDs to Redbox, resulting in a similar suit filed last year. Warner Bros. has yet to make a decision, however, Jeff Bewkes, chief executive of corporate parent Time Warner, said Redbox should have a waiting period before getting access to the company's discs.

Update (11:45 AM): Fox issued the following response to the lawsuit:

Fox spent several weeks trying to negotiate a deal with Redbox that offered Redbox varying terms that gave Redbox the option of purchasing DVDs either on the initial DVD release date or with a 30 day window. Unfortunately, Fox and Redbox could not reach an agreement. Redbox has now filed a lawsuit challenging Fox's ability to make business decisions that Fox believes are in its best interest as well those of consumers.  This lawsuit aims to limit Fox's ability to make legitimate business decisions, and Fox believes it will prevail in defeating Redbox's meritless claims.

-- Dawn C. Chmielewski

Credit: Elaine Thompson / Associated Press

20th Century Fox is thinking outside the box. Redbox, that is: The studio has just told the DVD kiosk company that it can't have DVDs on launch day.

Fox has instructed its DVD wholesalers not to sell discs to Redbox -- which is owned by Coinstar Inc. -- or other DVD kiosk companies until 30 days after they are released.

Many studios are wary of Redbox, whose business has doubled in the last year, because its kiosks rent out DVDs for just $1 per night. That undercuts stores with higher rental prices, Netflix and disc sales. All three carry significantly higher margins than studios can get even through a revenue-sharing agreement with Redbox.

Fox's move follows Universal Pictures' efforts to cut off Redbox. Universal is in court with Coinstar after telling wholesalers to cut off Redbox unless it agreed to a similar 45-day window. After today's move, Fox could also find itself in a legal dust-up with Redbox.

Sony Pictures is the only studio so far to reach an agreement with Redbox. Its deal guarantees revenue of $460 million over five years. Fox apparently decided that such an agreement wouldn't be acceptable.

"The basis of this position is to continue to provide the consumer with broad title choice and access to Fox movies while maintaining the quality image and value perception of Fox movies," a studio spokesperson said in an e-mailed statement. "Our desire is to maintain for Fox movies a thriving network of distribution serving all types of consumer preferences, on reasonable business terms for Fox as well as our distribution partners."

In a conference call with analysts and media earlier today after its fourth-quarter report, Chase Carey, president and chief operating officer of Fox's parent company News Corp., spoke more directly on the topic.

"Having our [movies] rented at $1 in the rental window is grossly undervaluing our products," he said.

Last week, Time Warner CEO Jeff Bewkes compared Redbox to $1 movie theaters to $1 movie theaters and said Warner Bros. movies "probably" shouldn't be available through kiosks until well after they first go on sale.

It's possible that Redbox will continue to offer Fox DVDs by purchasing them at retail, as it has done with Universal releases.

A spokesperson for Redbox did not have an immediate response to the move.

Update (Aug. 6, 10 AM): Mitch Lowe, president of Redbox, issued a statement in response to Fox's decision indicating that he has no intentions of agreeing to the studio's demands: "We were informed of Fox’s position late today.  Redbox stands behind our convenience and value that we offer consumers, and we’re pleased to make DVDs available the day they are released."

-- Ben Fritz

Photo: A Redbox kiosk in an Albertsons supermarket in Santa Monica. Credit: Lawrence K. Ho / Los Angeles Times

 

Paramount Pictures is in talks with at least two of its competitors to merge some elements of its home video backroom operations, people briefed on the negotiations said.

While negotiations are in a very preliminary stage, the Viacom-owned studio has initiated discussions with Sony Pictures and 20th Century Fox to combine the production, distribution and administrative elements of their DVD businesses, these people said. The talks are not limited to those studios and could expand to other studios, with Universal being a leading candidate.

People close to the talks stressed that any potential combination would be about saving costs, not about sharing revenue. The studios would not combine marketing or promotion of home entertainment.

There is precedent: Universal and Paramount formed a joint venture years ago called CIC to handle video distribution in international markets.

These talks come at a time when major retailers, including Wal-Mart and Best Buy, are reducing the amount of space they dedicate to carrying DVDs. First quarter DVD sales fell 14% in the first quarter of this year, compared to 2008, according to DEG: The Digital Entertainment Group, a non-profit trade group.

News of the talks was first reported by The Financial Times.

-- Joe Flint and Dawn C. Chmielewski

Gossip columnist Roger Friedman wants more than $5 million in lost wages and damages from Rupert Murdoch's News Corp. for firing him after he reviewed the company's "X-Men Origins: Wolverine" based on a pirated copy of the movie.

In a suit filed in New York State Supreme Court on Monday, Friedman says he was fired from his $250,000-a-year job (no, that's not a typo) as a columnist and contributor to Fox News illegally. He reiterates his interesting claim that the copy he viewed online ended up there only because Murdoch, the chairman of News Corp., had inadvertently allowed his own copy of the movie to appear on the Internet and that he was fired to cover that up.

The suit outlines in detail Friedman's take on the events of early April that led to his firing. He says he viewed "Wolverine" online and wrote a column about the film. He claims he sent an e-mail to a Fox News lawyer about watching the film online and didn't get a response. The article went up on the Fox News website on April 2, and less than 48 hours later it was taken down. Friedman says that he went to his editor, Refet Kaplan, to ask why and that Kaplan replied, "Rupert Murdoch ordered it taken down."

Usually if the chairman of the company wants something taken down, that's a bad sign. But Kaplan, the suit says, told Friedman on April 3 that he had talked to Fox News Chief Executive Roger Ailes and not to worry.

That apparently was bad advice. The next day, when the storm showed no signs of abating, Kaplan, according to the suit, told Friedman, "Ailes has got to get with Murdoch." Later that day, Friedman was fired and both News Corp. and 20th Century Fox issued damning statements about Friedman and piracy. Friedman says that John Moody, one of Ailes' top lieutenants at Fox News, told him to keep quiet and that on Monday, April 6, there would be a meeting that could "repair the situation."

Friedman, who has hired legal guns Joseph Johnson and Martin Garbus of Eaton & Van Winkle, wants $180,000 that he says is still owed to him on his contract and $5 million in damages. Friedman hasn't dropped off the face of the Earth since being canned by Fox News. He's blogging for the Hollywood Reporter and appeared today on NBC's "Today" show to discuss Michael Jackson.

A Fox News spokeswoman said the network had not been served with the lawsuit yet.

— Joe Flint

Photo: Roger Ailes and Rupert Murdoch. Credit: Peter Morgan/Reuters