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Intertainer Cuts Staff, To Close Web Site

Popular IP video-on-demand movie provider Intertainer is shutting down its Web site Oct. 23 and cutting more than half its staff while it tries to re-negotiate its distribution deals with four movie studios, officials announced Thursday.

Intertainer chairman and CEO Jonathan Taplin told internetnews.com he would put the site back online after AOL Time Warner , Sony , Universal , Col-Star, and New Line Television came to terms with a "fair business model."

"It will really depend on whether we can negotiate a settlement or move through the courts," he said. "The history of these types of lawsuits is the party that brings the lawsuit is usually victorious, I'd say the odds are pretty good."

In order to save revenues for a protracted court battle, however, Taplin said he was forced to cut his staff from 18 people down to eight.

Intertainer filed a lawsuit against the four last month, claiming they forced the online movie company to paying ever-increasing fees for first-run movie titles, to a point where officials said it cost the company $188 for every title they sold for $3.99 to its customers.

The reason for the increasing fees is many of the defendants were forming a joint venture of their own, Movielink, where customers can download movies. The company would be a direct competitor of Intertainer and officials claim a conspiracy was enacted to clear out other IP movie providers.

In a message to its 147,000 customers, Taplin thanked them for their support and promised to return "when there is an environment in which an independent company such as ours is allowed to compete for your business."

That might not be anytime soon, according to the lawsuit filed in the U.S. District Court for the Central District of California Oct. 23. According to Intertainer records, when the company first brought up litigation as a method to resolve the fee increases, Universal's senior vice president for world-wide IP pay-for-view told them she was a litigation lawyer and would drag the legal process on for three years.

"By then," the executive allegedly said, "you'll be out of business."

Already, the parties listed in the suit have begun the promised delay tactics. According to Taplin, the defendants asked for and received a delay to file their response to the lawsuit until Nov. 15.