Studios Back In Antitrust Spotlight As AMC Chain Loses Key Court Ruling

Goliath just took a whack from David in court in Texas today as a federal judge tossed AMC Entertainment’s attempt to toss out Viva Cinemas antitrust suit over the now shuttered theater’s Spanish-language showings of first-run studio pictures.

A trial is still probably a way off in what has been an over three-year legal battle so far but District Judge Alfred Bennett on Tuesday put things on that route in rejecting AMC’s motion for summary judgement. It is a rejection, with allegations of illegal “horizontal agreements” between AMC and its thousands of screens and The Walt Disney Company Warner Bros, Fox, Paramount, Universal, Sony and Lionsgate, may have the studios already feeling a little heat.

“Though the Court agrees with AMC that such evidence of horizontal agreements is precarious, screening out marginal cases is not an appropriate se of the Court’s summary judgment function,” Judge Bennett writes in his order made public today (read it here). “Based on this evidence, the Court cannot say a reasonable juror could not find the existence of horizontal agreements between the supplier.”

Probably not what the corner offices wanted to hear.

First filed in April 2015, Houston based Viva claimed that it was knee capped when AMC threw their not inconsiderable weight around and threatened not to show Warner Bros, Fox, Paramount, Disney, Universal, Sony or Lionsgate films if the studio did business with the local theater.

“Viva has also provided sufficient evidence to survive summary judgment on the issue of harm to competition by showing the availability of first run, wide release English films with Spanish subtitles or dubbing has been reduced to almost zero in the defined geographic market (even within the potentially larger five-mile geographical market),” the Southern District of Texas judge also adds of the 2013 closed independent exhibitor.

In an earlier filing, Viva claimed that its Spanish-speaking ticket buyers sought big budget Hollywood films that are dubbed or have subtitles and it served that need. Viva also said that its patrons constituted a submarket that does not really have an alternative. Back in 2016, AMC argued that just 7% of the local population speaks only Spanish. Swinging back, AMC argued that “movies are observed through more than just language. Viewers also observe story lines, body language, sound effects, etc.”

“AMC does not explain why 7% of Houston’s population is not a sufficient submarket,”Judge Bennett responded two years ago in a previously denied  AMC move to shut down the case.

Today, studio lobby group the MPAA did not respond to request for comment on the latest order.

On Tuesday, Judge Bennett expressed his own sense of the limitations of Viva’s case, with no firm citation of a conspiracy put before him so far. Still, the District Judge wants to see the matter fully test and to that end,the rule of reason analysis kicks in

“Viva points to four things to support an inference that such agreements existed: (1) the fact that all the suppliers uniformly refused to license first-run movies to Viva, (2) evidence that the suppliers knew AMC requested a clearance from all the other suppliers at issue, (3) evidence that the suppliers’ uniform compliance with AMC’s request was publically available knowledge, and (4) that such action was against each individual supplier’s self-interest (absent AMC’s request) unless they all acted uniformly as any individual supplier would want their movie in as many theaters as possible and would not want to lose any market space to the other suppliers,” deduces Bennett.

All of which means Viva may be closed but this potentially far reaching case is certainly not.

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