ENTERTAINMENT : CBS/Fox Suing MGM/UA Over Video Distribution Pact

CBS/Fox Co., a home video distributor, claims in a lawsuit that it has lost millions of dollars in potential profit because MGM/UA unfairly manipulated a video distribution agreement.

In one instance, CBS/Fox says it ended up distributing the relatively poor-performing MGM/UA film “Captive Hearts” when it could have picked up “Spaceballs,” a 1987 Mel Brooks film that grossed about $200 million--nearly six times more than “Captive.”

An MGM/UA spokeswoman said the company does not comment on pending litigation. CBS/Fox is seeking, among other things, at least $50 million in damages and another $50 million in profit it claims MGM/UA made by breaching the distribution agreement.

The lawsuit, which was filed in U.S. District Court in New York, stems from an agreement struck eight years ago between the corporate ancestors of CBS/Fox and MGM/UA.

In 1981, United Artists, which was subsequently merged into MGM/UA, sold its U.S. home video distribution rights to Magnetic Video Corp., a home video pioneer. Magnetic Video was later acquired by CBS/Fox, a partnership formed by CBS Inc. and 20th Century Fox Film Corp.

Following an earlier dispute, both groups agreed in 1985 to take turns distributing MGM/UA-produced films on home video. CBS/Fox would be entitled to distribute 45 such films under the agreement.

But CBS/Fox alleges, among other things, that MGM/UA juggled the theatrical releases of its films so that CBS/Fox always ended up with the video rights to films that were destined to perform poorly. As a result, CBS said, it lost the video rights to such blockbusters as “Rain Man.”