CALIFORNIA SUES BLOCKBUSTER ON TIE-IN REBATE ADVERTISING

DAN ALAIMO

SAN FRANCISCO -- In a move that may cause studios to rethink rebate promotions with packaged goods companies, the attorney general of California is suing Blockbuster Entertainment, Fort Lauderdale, Fla., for deceptive advertising.

The attorney general's office had received complaints that Blockbuster had failed to disclose to consumers that they had to buy additional products to qualify for the $5 mail-in rebate on "Beauty and the Beast" and 24 other Disney titles, said Chris Ames, supervising deputy attorney general of the consumer law division here. The 1992 promotion required the purchase of Nabisco products to qualify for the rebate. Nabisco officials declined to comment.

Additionally, California has a statute that prohibits the offering of a rebate that requires the customer to go to more than one store to buy the products needed to obtain the rebate, he said.

This law is enforced on "a case-by-case basis," said Ames. It has been on the books for many years, he added.

Other retailers who might not have carried the Nabisco products along with the Disney videos were not included in the lawsuit because there were no complaints against them, he said.

Blockbuster would not comment on the situation. "We do not comment on pending litigation," said Wally Knief, corporate communications manager.

The rebate law has little significance for supermarkets, because, in most cases, they carry all the products required for consumers to get the rebates on sell-through videos, said industry observers. Indeed, supermarkets often highlight the video and rebate products in ads and on big endcap displays. Large mass merchants, like Wal-Mart and Kmart, either stock all the products or spell out the rebate conditions clearly, they added.

But if studios were to curtail these promotions, supermarkets would lose a powerful marketing tool, the observers said.

Whether the existence of such a rebate law in the nation's most populous state -- the home state of the major studios -- will hinder future cross-promotions remains to be seen, they said.

"This is ongoing litigation and the effect that it might have would be purely speculative at this point," said Bob Finlayson, director of public relations for the Video Software Dealers Association, Los Angeles. VSDA is unaware of any similar rebate laws in other states, he said.

Buena Vista Home Video, Burbank, Calif., has no plans to cut back on tie-in rebates, said Tania Steele, vice president of publicity and event marketing. Buena Vista is Disney's video marketing and distribution subsidiary, and is the most aggressive of the studios about participating in cross-promotions.

Buena Vista is now in the process of stepping up its involvement in cross-promotions. For example, the made-for-video "The Return of Jafar" will be supported by two $5 mail-in rebate offers this spring, one from Pillsbury and one from Mattel Toys. The company's Studio Film Collection will tie-in with Jolly Time Popcorn for a $3 rebate this spring.

The marketing of "Snow White and the Seven Dwarfs," the company's major sell-through title for this fall, also will involve cross-promotional partners, Ann Daly, president of Buena Vista, told SN. Details on that program will be announced in late March, she said.

Steele would not comment on the Blockbuster lawsuit. As for Buena Vista's role, she said, "we are not involved in it."