Is Paramount Poised to Follow Warner Bros. to Blu-ray?

The Financial Times has a report that if true, would send HD-DVD into the same abyss as Betamax: it states there is a clause in Paramount's contract with the HD-DVD group that would allow it to switch sides in the event of Warner backing Blu-ray, and that Paramount is "poised" to use it.

However, the article doesn't have much to back up its claims, aside from the typical "sources familiar with the situation."

You will recall that last year Paramount decided to support HD-DVD only, in a move that angered Transformers director Michael Bay. Last year's Transformers HD-DVD release arguably set records. The studio's agreement with the HD DVD group reportedly was set for 18 months.

And this year, Paramount is set to have several likely blockbusters, including the latest installment in the Indiana Jones franchise and Iron Man.

With Warner's move already giving the Blu-ray group 70% of the content available, and if Paramount exercises its clause it would likely be the death knell for HD-DVD.

The article indicates however, that it is unknown if Dreamworks has the same escape clause, though Paramount and DreamWorks have a close relationship, with Paramount distributing DreamWorks Animation films.

Universal hasn't commented on its plans since the Warner Bros. move, but any move by Paramount would definitely be the tipping point.

At the same time, a "win" by Sony's Blu-ray format would be ironic, since it was Sony's Betamax format that earlier lost the format wars to VHS.

Update: Paramount has responded and has flatly denied this report.