updated 11/17/2006 8:13:13 PM ET 2006-11-18T01:13:13

Discount retailer Target backed off plans to pull in-store promotions of products from Walt Disney after Disney threatened not to ship DVDs of hit movie “Pirates of the Caribbean: Dead Man’s Chest,” a person familiar with the situation said Friday.

The companies are at odds over The Walt Disney Co.’s decision to sell movies online through Apple Computer Co.’s iTunes store for less than it charges Target and other retailers.

The dispute is part of a feud between a number of major retailers and Hollywood studios over online movie sales.

Target Corp. stores had removed signs promoting the DVD of the Disney-Pixar animated film “Cars” and other Disney products, according to a person familiar with the situation who was not authorized to speak for either company.

The two sides are discussing their differences after resolving the standoff, the person said.

A Disney spokeswoman declined comment. A call to Target for comment was not immediately returned. The situation was reported on the Disney Internet fan site JimHillmedia.com and in the Wall Street Journal.

Studios selling digital copies of films for less than the wholesale price of DVDs rankles retailers, who see Internet distribution of films as a threat to their business and have reminded studios that DVD sales provide the majority of profit for most films.

Studios counter that digital versions of films should be less expensive because they are lower quality and typically do not contain the kinds of extra features included on DVDs.

Last month, Target President Gregg Steinhafel sent a letter to every Hollywood studio warning them about undercutting the wholesale price of DVDs by giving online services a better deal on digital offerings.

“Target cannot be expected simply to accept that risk and continue to do business as usual,” Steinhafel wrote.

“Our space, signing, promotional programs and the hundreds of millions of consumers in our stores annually should not be undervalued,” he wrote.

Disney so far is the only studio offering films over iTunes, which sets its own price for all titles.

Disney and other studios also sell films through other online services, which allow the studios to set their own prices.

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