Upscale theater chain iPic’s conspiracy claims that AMC Entertainment and Regal Entertainment have been working together to kill new competition in certain markets is being allowed to proceed to trial after a ruling by Judge Wesley Ward in the 234th District Court in Harris County, Texas on Friday. The trial date is set for October 3.
AMC was unsuccessful in its attempt to get the court to drop the claim. iPic presented its evidence, based on internal AMC documents, that AMC and Regal “radically departed from the movie industry’s previous practices, including by making clearance demands against iPic within hours of each other to the same studios, a year or more before the targeted iPic theaters were even built.”
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This comes after both Fox and then Universal Pictures said that they would no longer grant exhibitor clearances. The practice, which has been long-standing in the industry, are agreements between a theater chain and a distributor whereby an exhibitor obtains the exclusivity to show first-run movies at its hubs within a certain zone, and thus block nearby competition from playing the same title simultaneously in the same zone.
The Antitrust Division of the U.S. Department of Justice and several state attorneys general, including Texas, are taking this seriously and have been investigating the competitive practices of Regal, AMC, Cinemark and others regarding exclusionary boycott demands and potential violations of antitrust laws.
When we checked one of the best known competitive zones in the U.S. — the AMC Empire 25 and the Regal E-Walk, which are directly across from each other on 42nd Street, adjacent to Times Square in New York City — we were told by an executive at AMC that it would be playing X-Men Apocalypse in that specific competitive zone. It is.
However, clearances can hurt the little guy, which was iPic’s point in its original filing in November 2015 alleging that the large theater chains were using unlawful practices to stifle competition, force smaller exhibitors out of business, and even prevent them from securing leases to develop theaters in certain locations. They said that Regal and AMC threatened the Hollywood studios that they would not run their films if the studios allowed these first-run films to play in new theaters in their same market.
In January, the court found that Houston’s iPic theater was not in substantial competition with Regal’s Greenway Grand Palace 24 Megaplex theater and ordered Regal to stop demanding that the studios refuse to license the same movies to the iPic theaters that play in the Regal Greenway competitive zone.
Paramount has a long-standing practice of not honoring exhibition clearances, which the late Don Harris (a former AMC executive-turned-Paramount distribution head) stood staunchly by. Sony and Disney still believe clearances are good for business, particularly when it comes to maximizing revenue for a film.
“We are extremely pleased that the Court denied AMC’s attempt to escape liability in this important suit to stop anti-competitive attacks in the industry. This is a win for iPic, for the moviegoing public, and for all independent movie theaters,” said Hamid Hashemi, CEO of iPic Theaters in a statement.
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