Regal Entertainment must stop “demanding or requesting exclusive film licenses” in the Houston area while the No. 1 chain defends itself in an unfair business practices case, a Texas District Court ruled today.
A small exhibition company, iPic Entertainment, won the temporary injunction as it challenges Regal’s effort to secure local monopolies for showings of hit films. The Justice Department is also investigating the practice, common among all of the largest theater companies.
iPic says that Regal cut deals with studios that prevented it from showing films including The Hateful 8, Ride Along 2, The Martian, Sisters Concussion and The Revenant. iPic adds that its suit showed that “Regal threatened boycotts of specific movie studios, and the first-run films they produce, if smaller boutique theaters were given licensing rights to such releases.”
iPic told the court that Fox, Universal, and Sony “capitulated” to Regal and denied offering hit films to the smaller company. They praised Disney for refusing to play ball with Regal. “Some of the studios, for example, Disney, are very powerful, and they’ve got some of the best films in the country. And they’ve said: We don’t want any part of this. Thank goodness for Disney.”
iPic lawyer Paul Yetter told the court that Regal made “the proverbial Marlon Brando offer, Godfather offer you can’t refuse.” Although Disney refused to engage in the practice, “some of the studios can’t afford to say ‘no’ to the number one cinema chain in the country. And they can’t afford to say no to the Regal Greenway which has over 5,000 seats when they say: ‘We will not play your films.'”
Calling the studio’s “reluctant partners,” Yetter outlined how the top exhibitors carry out their threats to the industry: “What Regal and AMC have done, and Regal successfully so far has said to the studios: If you don’t exclude iPic, I will punish you because I have a 5,000 seat theater. And I won’t show Spectre or Mockingjay or Star Wars. And if you give it to that 500-seat niche boutique theater, I will punish you, studios. I’m not going to give you anything good. But if you don’t agree, you don’t capitulate to my request, I’m going to punish you.”
Regal says that it does not comment on matters involving litigation.
But last year CFO David Ownby, responding to a question about the Justice Department investigation, told an investor gathering that clearances “have always been upheld” in courts and that they’re “good” for customers and the industry.
In siding with iPic, the Texas court said that access to hit films is “essential” — and denial “will cause imminent, irreparable harm” to the company “as well as to the movie-going public.” (You can find the order here.) It ordered Regal to not engage in “anticompetitive and unlawful conduct,” noting that iPic has demonstrated “a probable right” that it could prevail when the larger case is heard. That trial is due to start on October 3.
Anita Busch contributed to this article.