Regal Charged With Making Anticompetitive Clearance Deals In NYC

Regal Entertainment Group

Here’s the latest challenge to clearance agreements — the controversial deals that give big exhibition chains a monopoly in a local territory on showings of some blockbuster films.

Now Forest Hills, NY-based Cinema Village Cinemart wants the U.S. District Court in New York to stop Regal from engaging in a practice that it “cannot gain access to a supply of first-run films from even a single major distributor.”

The Justice Department and several state attorneys general are investigating the practice at all of the major theater chains. It’s also is at the center of other lawsuits.

Cinemart says that the No. 1 exhibition chain “has used the immense buying power of its theater circuit… to combine with and coerce film distributors to deprive Cinemart of fair competitive access to films.”

For example, when the independent theater showed Warner Bros’ American Sniper, a local Regal-owned competitor, Midway, “in an apparent act of protest…refused to play day and date” with Cinemart. Afterward, Warner Bros “backed off of their previous commitment to allow the Cinemart to play all first run films with Midway day and date.”

Disney, Lionsgate, Paramount, Universal, Disney and Fox followed suit, according to the complaint: “Cinemart has been informed privately by several individuals at the above mentioned distributors that Regal has threatened and coerced film distributors into granting Regal clearances in Queens.” Small operators lack “muscle to retaliate by withholding screens.”

If it continues, then “Queens will lose its sole independent theater….The result of Regal’s monopoly over first-run films has resulted in higher box office prices and the elimination or restriction of discounts that competitive pressures engender.”

Regal didn’t respond to a request for comment about the suit. But last month CFO David Ownby told an investor gathering that the local exclusivity deals have “always been upheld” in courts and “are good” for customers and the industry.

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