Paramount Denies Report It Will Drop Toshiba's HD DVD (Update2)

By Andy Fixmer and John Liu

Jan. 8 (Bloomberg) -- Viacom Inc.'s Paramount Pictures denied a newspaper report that the studio is poised to follow Time Warner Inc. in abandoning Toshiba Corp.'s HD DVD technology.

``Paramount's current plan is to continue to support the HD DVD format,'' Brenda Ciccone, a spokeswoman for Paramount, said in an e-mail today.

Toshiba, the leading promoter of the HD DVD format for high- definition video discs, fell in Tokyo trading after the Financial Times reported Paramount is poised to adopt Sony Corp.'s Blu-ray format instead.

Paramount can defect because a clause in its contract with the HD DVD camp allows the studio to switch to Blu-ray if Warner Bros. Entertainment Inc. dropped its support of Toshiba's standard, the newspaper reported today, citing unidentified people familiar with the plan. Warner Bros. said on Jan. 4 it would drop its support of HD DVD.

Keisuke Ohmori, a spokesman for Tokyo-based Toshiba, said the report is speculative. Masayo Endo, a spokeswoman for Sony, declined to comment on the report.

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Well... we've had SOME confirmation this morning of the details of the Financial Times story from last night. While the studio isn't yet commenting, reliable industry sources are telling us that Paramount is indeed preparing to end their HD-DVD support and announce a return to the Blu-ray fold. Details are currently being finalized, and an announcement is expected as soon as they're complete. Paramount's first new Blu-rays will almost certainly include many of those titles that were cancelled last year, but that were already packaged and ready for shipping, so you could see them in stores very quickly once the studio announces.

Meanwhile, sources are telling us that Universal has also been talking with the BDA, and is looking to follow Paramount and Warner's lead as soon as possible.

On a related note, Times Online in the U.K. is now reporting that as many as 20 additional firms currently backing HD-DVD are also considering defection in the wake of Warner's Friday announcement, including Fujitsu, Lenovo, Kenwood and Pony Canyon (which is a major Japanese film and music studio).

What's more, word is starting to circulate at CES that major big box retailers will begin winding down in-store support for HD-DVD as soon as these studios go public with their decisions. We're told that the industry's major retail partners are already pressuring Paramount, DreamWorks and Universal to go Blu following Warner's decision.

Rumors are also beginning to circulate here that Apple's Steve Jobs may announce the addition of Blu-ray Disc drives to their Mac desktop lineup at next week's Macworld Expo in San Francisco.

We would caution you to keep in mind that all of this should be considered unofficial until the studios make their actual announcements. Things are moving very fast, and the situation is highly fluid. Still, it really looks like this is the end for HD-DVD, and the end of the format war overall. We'll keep you up to date with new developments as they break.

Stay tuned...