EXCLUSIVE: 3rd update 2:30PM with statements from Cinemas Palme d’Or owner Bryan Cranston & Cinemark: The owners of Cinemas Palme d’Or — Bryan Cranston, ESPN Radio host Steve Mason, Andreas Mauritzson and Brian Tabor — have no choice but to close the doors on their venue after a 13-year-plus struggle with big exhibitor chains’ circuit-dealing practices, chiefly Cinemark’s.
Said award winning actor Cranston in a statement, “Cinemark finally succeeded in driving the last nail in our coffin. We just couldn’t continue the struggle in this unfair business climate.”
Cinemas Palme d’Or in Palm Desert, CA, will shutter June 30 but will reopen the next day under Tristone Cinema Group in Wildomar, CA. The theater will get a new name. Essentially, here’s what went down: Cinemas Palme d’Or’s landlord no longer could offer a lease extension after the theater was continually late with its rent. In terms of payment priority, Cinemas Palme d’Or always made sure distribs were paid first, since the theater’s livelihood depended on their product. Said the theater’s co-owner Mason, “There is a new operator, and they will attempt to be successful.” Essentially the only goods sold between Cinemas Palme d’Or were projectors and a few seats, not the business name.
A letter sent to distribution executives this morning by the Cinemas Palme d’Or owners stated: “We could no longer stay solvent because of Cinemark’s constant pressure on studios and distributors to shut us out of major titles. We have fought hard, but circuit-dealing has made it impossible to stay in business.” (Read the full letter below.)
Circuit dealing is the predatory film-booking practice whereby multiplex chains strong-arm studios for a title in a specific market. If a studio decides to book with the competition in a given community, usually a mom-and-pop venue, then the big exhib will threaten to bar that film (or future films) from playing their entire chain.
Cinemark released a statement this afternoon stating, “Flagship Theatres of Palm Desert LLC (d/b/a Cinemas Palme d’Or) sued Cinemark (and Century) approximately 10 years ago for alleged ‘circuit dealing.’ Flagship’s allegations against Cinemark are, and always have been, entirely without merit. Cinemark simply does not engage in “circuit dealing.” In April 2014, the trial court dismissed Flagship’s case against Cinemark in its entirety because the Court found that Flagship’s principals had unlawfully destroyed vast quantities of evidence during the pendency of the litigation. In addition to having its case dismissed by the trial court, Flagship also was required to pay Cinemark monetary sanctions. Flagship is currently appealing that decision. Going forward, Cinemark will continue to license motion pictures at each of its theatres on a film-by-film, theatre-by-theatre basis.”
“At some point our fight became more about than just our theater, it became about the general unfairness in this business,” Mason told Deadline earlier today. “It’s about how these big companies beat up the little guys.”
Mason added: “To give you an example of how much power Cinemark exerted on distributors to prevent us from playing a film, Disney had Star Wars: The Force Awakens. And for any theater to book that title, it was like Black Friday — it made your year. We knew we needed it, and we knew Disney was starting to ignore clearances. We offered to pay them 100% film rental, every penny from every ticket on Force Awakens so that at least we’d make money from concessions. Disney said no. Then we offered 125% on every ticket, and the studio still said no. Cinemark just put their foot down and said absolutely no way, no way.
“We also offered Sony 100% on Spectre,” Mason added, giving another example.
Cinemas Palme d’Or has been engaged in a legal battle with Cinemark since 2006. When Century Theaters acquired the River Multiplex in nearby Rancho Mirage in 2002, it allegedly cannibalized first-run titles available to parent company Flagship’s 10-screen cinema just two miles down the road on Highway 111. This practice didn’t let up once Cinemark took over Century. The owners of Cinemas Palme d’Or state in their letter that they will continue their suit against Cinemark.
20th Century Fox recently decided with the release of X-Men: Apocalypse that it no longer would honor clearance requests from theater owners, a practice other major studio distribution chiefs say they wouldn’t follow. In the Palme d’Or letter today, the owners applauded Fox’s decision and urged other studios to do the same. “Unfortunately, this positive move by one studio has come too late for us,” today’s letter says.
Before Palme d’Or shuts its doors, both X-Men: Apocalypse and Independence Day: Resurgence will be booked on their marquees. The theater owners also praised late Paramount distribution executive Don Harris as a guy who “always did what was fair and what is right. He chose not to honor blanket clearances where independent theatres were getting clobbered by the major circuits.” The National Association of Theatre Owners has stated previously on clearance matters that it doesn’t concern itself with competitive distribution issues.
The damning letter comes as the U.S. Department of Justice has been investigating this anti-trust issue on whether these exclusivity agreements between the studios and big exhibitors Cinemark, Regal and AMC that limit the number of theaters allowed to screen certain movies in some locations violate federal law. The practice was the subject of a lawsuit brought by iPic against Regal Entertainment, and in January, the lower Texas court granted iPic (and other smaller exhibs) a reprieve, telling Regal to stop the practice. An iPic lawyer presented evidence in court that Regal cut deals with studios that prevented it from showing such big films as The Hateful Eight, Ride Along 2, The Martian, Sisters, Concussion and The Revenant.
After July 1, Exhibitor Support Partnership will handle booking for Tristone, according to their own email this morning: “ESP has been hired as the film buyers. The theatre will operate, much as it is currently, as a full admission theatre with a first-run policy.”
Here is the Cinemas Palme d’Or letter in full:
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