UPDATE 2-Paramount, Redbox in trial DVD rental program

* 4-month trial program could be extended through 2014

* DVDs made available upon initial release
(Updates with financial terms, additional background)

SAN FRANCISCO, Aug 25 (Reuters) - Paramount Home
Entertainment and Coinstar Inc's (CSTR.O) Redbox said on
Tuesday they have entered into an agreement that will provide
the DVD rental kiosk service with access to Paramount Pictures
releases on a trial basis through the end of the year.

Following the four-month trial period Paramount, a unit of
Viacom VIAb.N, will have the option to extend the program
through 2014, with an out clause after two years.

Under a revenue-sharing agreement, Redbox estimates it
would pay Paramount roughly $575 million if the deal runs
through the extended period, according to a filing with the
U.S. Securities and Exchange Commission.

Paramount's DVDs will be made available to Redbox on the
so-called "street date," when the title is released to the
public. In addition, as part of the agreement, Redbox has
agreed to destroy DVDs once the company removes them from the
kiosk.

Redbox expects the DVDs licensed and purchased from
Paramount to represent close to one-fifth of the Redbox's 2009
total.

Redbox operates more than 15,000 rental kiosks across the
country, and the company is battling multiple video providers
over its distribution service.

Some Hollywood studios fear the chain's $1 rentals are
hurting rental revenue and DVD revenues even as the overall DVD
market is shrinking.

Redbox has sued Time Warner Inc (TWX.N) unit Warner Home
Video, News Corp's (NWSA.O) Twentieth Century Fox and Universal
Studios for trying to stop it from renting out films on the day
of retail release.
(Reporting by Gabriel Madway and Matthew Lewis; Editing
Bernard Orr)