Rite Aid: DVD Boxed Sets for $10 - Page 2

Will, it has nothing to do with how much people think they're worth. Warner Brothers is contending that they paid IWMB a certain amount of money to destroy merchandise which Warner Brothers saw as a tax liability and opted to destroy the excess merchandise. Now, after IWMB provided Warner Brothers with a "Certificate of Destruction," Warners reported that to the IRS, which WB declared as a business loss. Now, when IWMB sub-contracted that work to another company, the second company comes into play, which turned around and sold that inventory off, instead of destroying it. Warner Brothers would also need to file a report with the SEC declaring that it had destroyed excess inventory and declared it as a business loss, which would affect its stock and its profits.

Now, it becomes a matter of criminal acticity since the IRS, the SEC and stockholders were defrauded. What you're saying is that you think that these titles held little or no value and you cannot see how Warner Brothers came up with their figure. Warner Brothers came up with the figure by taking into account what they would've sold that inventory to retailers and through their own website. Also, Warner Brothers isn't counting on just $10 million. Since 1,000,000 (One Million) Boxed Sets, which were supposed to be destroyed but were shipped out to distributors and then to discount stores like Big Lots, Warners took to that as theft and they are right. The sales of those sets to these new market discount retailers not only undercut national retailers like FYE, Target, Best Buy and Walmart but this is also criminal since it's against Federal Law to engage in such practices. The FTC would be involved in a criminal investigation on that level.

This hurt retailers who depended on potential sales and which were robbed of those sales. Warner Brothers figure comes as a result of multiplying $10 per set ($10 Million Dollars). However, Warner Brothers is seeking more than just the $10 Million. Their statement was that the value of those sets exceeded $10 Million Dollars. Remember that each set valued at a SRP of $50-60. Remember that the SRP is what the manufacturer suggests that title, that release, to be sold at.

It's not the consumer who sets the value, it's the manufacturer, the company who owns the production or creation of that product. My guess is that this is only the first stage of what I see as a variety of lawsuits.

At the very least, Warner Brothers can receive as much as $10 million, which involves a pricing at $10 per set. The judge may determine that there was deliberate malice involved since Warner Brothers, the IRS and the SEC were deceived in this debacle. Not only could Warner Brothers get between $10-50 million ($50 million represents the full retail price) but Warner Brothers could also be awarded additional funds for deliberate harm caused by the IRS filing as well as damage to Warner Brother's stock price.

It also begs the question of whether the IRS and the SEC goes after these two companies by themselves since the two companies who were responsible for the destruction of those DVD's received money and didn't pay taxes on that income.

By the time this is all over, those two companies may be forced into receivership and, in effect, closed down.