The nation’s largest theater chains are under increased scrutiny by the U.S. Department of Justice over exclusivity agreements between the exhibitors and studios that limit the number of theaters allowed to screen certain movies in some locations, the Wall Street Journal reports. The “clearance” agreements have become increasingly frustrating for smaller theater chains that say the practice violates antitrust law, limits consumer choice and is used to muscle competitors out of business.
Regal Entertainment, AMC Entertainment and Cinemark, the three largest chains, have attracted the most attention but the Justice Department has not launched a formal investigation. The big circuits contend that clearance is a long-standing industry practice that affects only a small number of locations.
Studios tend to resist limiting the number of theaters playing their movies because they prefer to to maximize revenue for opening weekends on big movies. And they’re not too keen on government scrutiny, either. Paramount Pictures and Warner Bros are especially averse to clearance requests, Journal sources said. Neither studio commented.
Clearance also has drawn the attention of Texas Attorney General Ken Paxton, sources told the Journal, and Deep South exhibitor Cobb Theatres has sued AMC in U.S. District Court in Atlanta. A judge in that case denied AMC’s motion to dismiss the suit, and it has moved to the discovery phase.