[staytrue]

I don't know how they even thought it could be legal, since by cutting bits you are creating a derivative work, which is still covered by copyright and thus distribution is controlled by the copyright holder.

They need to pay royalties, but they should be allowed to scrub the films. If I buy a book and ask a person to black out profanity before I read it, that should be fine.

Copywrite does not protect from editing by the end user. Only royalties are protected.

[antiRepublicrat]

Copywrite does not protect from editing by the end user.

No (at least realistically, not the overly restrictive licensing the studios want). But it does protect from that end user redistributing the derivative work.