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» Film-Tech Forum   » Operations   » Ground Level   » AMC, Regal, Cinemark Theaters Probed By Justice Department For Antitrust Violations (Page 1)

 
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Author Topic: AMC, Regal, Cinemark Theaters Probed By Justice Department For Antitrust Violations
Ron Yost
Master Film Handler

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From: Paso Robles, CA
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 - posted 06-02-2015 10:26 PM      Profile for Ron Yost   Email Ron Yost   Send New Private Message       Edit/Delete Post 
After AMC and Regal, Cinemark gets DoJ notice on antitrust probe

From REUTERS, June 2, 2015:

quote:
Movie theater chain Cinemark Holdings Inc said it had received formal inquiries from the U.S. Department of Justice related to an antitrust probe, a day after larger cinema operators Regal Entertainment Group and AMC Entertainment Holdings received similar notices.

Cinemark said it received a Civil Investigative Demand from the DoJ's antitrust division related to an investigation on matters including joint ventures and film clearances. (1.usa.gov/1BIJJjL)

Film clearances are exclusive deals signed between large movie theater chains and film studios to limit the number of theaters allowed to screen certain movies, especially blockbusters. This keeps big movies out of smaller independent chains' reach, consumer affairs blog Consumerist said.

Houston-based Viva Cinema sued AMC Entertainment on April 20, saying AMC had coerced distributors to not licensing their films to it, which resulted in the theater's closure nearly seven months after its opening.

The DoJ is investigating whether the three top theater chains violated the Sherman Act, a federal antitrust law, and has requested the companies to answer its questions and produce documents.

Cinemark said it also received a second civil investigative demand from the Attorney General of Ohio. Both Regal and AMC received similar notices.

All three companies said they did not believe they violated federal or state anti-trust laws. (Reporting by Anya George Tharakan in Bengaluru; Editing by Don Sebastian)


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Martin Brooks
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 - posted 06-23-2015 10:11 PM      Profile for Martin Brooks   Author's Homepage   Email Martin Brooks   Send New Private Message       Edit/Delete Post 
Didn't we go through this in the 1940s and 50s? By the time the Feds got around to fully implementing the consent decree, which forced the studios to spin-off the theaters, the theaters were under threat from television and thousands of them closed in the following years.

Had there been no consent decree, the big chains might have preserved the movie palaces and other theaters and kept them in better condition for many more years.

Now theaters are under threat from all the other ways that people can see movies as well as increasing real-estate values in some big cities. This is most certainly not the time to be pursuing anti-trust violations against them, even if there's some merit to the charges.

I'm no fan of the big chains, but put pressure on them and theaters will close.

In NYC, where most real estate is worth far more than what a movie theater can gross today, since 2001 we've lost 29.5% of the theatres and 16.35% of the screens. In 2001, there were about 15,000 people per screen. Now there's over 19,000 people per screen. The five boroughs of NYC are down to just 53 theaters (428 screens). By my estimates, there's about 100,000 seats for a population of 8.3 million people.

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Martin McCaffery
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 - posted 06-23-2015 10:30 PM      Profile for Martin McCaffery   Author's Homepage   Email Martin McCaffery   Send New Private Message       Edit/Delete Post 
Actually, DOJ was after theatre chains of various types almost constantly from about the 1920's. The Paramount Consent decree is just the most famous and one of the last.

It is quite possible the practices of the targeted companies are the reason for the drop in theaters. Afterall they have been trying for years to drive each other out of business with the expansion of multiplexes to gigaplexes etc. Rave did a pretty good job on Carmike here (which, in turn used plenty of monopolistic practices to do in competing theatre). It is of course ironic that Carmine came back by buying up Rave's theatres when they liquidated.

Or it could be DCI. Or theatres just close all of the time anyway.

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Steve Guttag
We forgot the crackers Gromit!!!

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 - posted 06-24-2015 07:15 AM      Profile for Steve Guttag   Email Steve Guttag   Send New Private Message       Edit/Delete Post 
I disagree. The practice of clearance doesn't really help the industry and does just the opposite of what you want. If I can clear on a titles I can effectively keep people from building around me (that is the point of it)...as such, fewer screens/neighborhood.

There are many reasons for screen reduction around the country and that is a longer discussion and movie clearance isn't something that would help it.

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Lyle Romer
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 - posted 06-24-2015 09:14 AM      Profile for Lyle Romer   Email Lyle Romer   Send New Private Message       Edit/Delete Post 
quote: Steve Guttag
If I can clear on a titles I can effectively keep people from building around me (that is the point of it)...as such, fewer screens/neighborhood.
While this practice keeps the number of screens down, I think that it hurts the overall business. It allows subpar theatres to exist simply because nobody can effectively compete with them.

If I could build a theatre across the street from a Regal and was allowed to play day and date, I could create a quality location. Initially, I would take customers from Regal. They would be forced to come up to (or exceed) my standards. Otherwise, they'd have to close the location.

If they upgraded, I believe more people overall would attend movies because they would be getting an experience worth the price of admission at both locations.

The entire industry should want this type of competition to make moviegoing an experience again.

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Randy Stankey
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 - posted 06-24-2015 12:28 PM      Profile for Randy Stankey   Email Randy Stankey   Send New Private Message       Edit/Delete Post 
When I worked at Cinemark, it was fashionable to use the word "product" when referring to the movies that were on the screen.

e.g. "We're getting good product, this summer."

Frankly, that's the most cockeyed world view I can imagine!
Your "product" isn't the movies! The product is your THEATER.
You sell your theater, your seats, your movie presentation, your popcorn and your SERVICE.

People can get movies anytime, anywhere, 24 hours a day. A theater is only open for 12 hours. When you think of your "product" in terms of the movies on your screen, you automatically put yourself at a disadvantage. You CANNOT compete with what is available to the consumer on a "movie = product" basis.

People in the theater business have been making the joke, "Theaters are just popcorn stands that also show movies," for as long as I can remember. The problem is that the theater business really is like that but people in the business seem to forget it.

As long as there are "clearance zones" theater owners are never going to change their attitudes and learn to compete on the basis of serving the customer.

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David Buckley
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 - posted 06-24-2015 05:28 PM      Profile for David Buckley   Author's Homepage   Email David Buckley   Send New Private Message       Edit/Delete Post 
quote: Lyle Romer
If I could build a theatre across the street from a Regal and was allowed to play day and date, I could create a quality location. Initially, I would take customers from Regal. They would be forced to come up to (or exceed) my standards.
This assumes, of course, that the patrons give a flying fuck about "quality".

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Martin McCaffery
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 - posted 06-24-2015 06:10 PM      Profile for Martin McCaffery   Author's Homepage   Email Martin McCaffery   Send New Private Message       Edit/Delete Post 
Anyone know the current average lifespan of a movie theatre? I recall it being 15 years, which would be about right in this town, but wonder what it is nationally.

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Lyle Romer
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quote: David Buckley
This assumes, of course, that the patrons give a flying fuck about "quality".
True. They definitely care about cleanliness/customer service.

As far as quality, it has to be things they will notice. Certainly brightness, masking, screen size, clear audio etc. Also comfortable seats.

Let's put it this way. I can guarantee that if I opened a theatre across the street from any Regal and did everything right and provided great service, I would hurt their grosses significantly. They would either have to upgrade to my standards or be put out of business.

The stupid clearance zone model is what makes it extremely difficult to enter the business. It is a very hard sell to investors when you could open the best theatre on earth and all it takes is somebody opening one (even if it is a shit hole), 2 miles away and they will basically put me out of business just from lack of movies to show.

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David Buckley
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quote: Lyle Romer
They would either have to upgrade to my standards or be put out of business.
They could indeed, put in better seats, better concessions, things punters notice. Certainly, the decimation of film (done right) for [dlp] hasn't killed exhibition.

Or, they could just drop their prices. Punters might notice that. As a start up, even with deep pocketed investors, they could certainly make your life uncomfortable, and price wars that end up as a race to the bottom can have bad outcomes...

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Randy Stankey
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Or you could act nice to customers so that they like coming to your theater better than the one across the street.

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Jonathan Goeldner
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interestingly it appears that Regal screws over Cinemark's Fairfax Corner's theater - it might be that they are too close to one another - but I've noticed that nearly all of Disney's movies play exclusively over at the Regal.

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Mike Spaeth
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So far this year, in the Fairfax zone:

Regal - Inside Out, McFarland USA, Strange Magic
Cinemark - Avengers: Age Of Ultron, Cinderella, Tomorrowland, Monkey Kingdom

Looks like Cinemark actually has the allocation edge in this zone.

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Scott Jentsch
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quote: David Buckley
This assumes, of course, that the patrons give a flying fuck about "quality".
To think otherwise drastically underestimates that paying customer.

I think that any customer worth wanting to patronize your movie theater does care about quality and other aspects of the moviegoing experience.

Sure, there are some people who don't care. They don't want to pay any more than they absolutely have to. Those people are also probably the people that put their feet up on the seats, text and talk during the movie, and then leave all kinds of messes behind for others to deal with. In other words, the kind of customer that's not worth having.

Everyone else, however, will respond to a high level of quality and showmanship. They may not have experienced it, so they may not know that they want it, but once they've experienced it, and once the less obvious things are pointed out to them, they will come to expect it, and what might have been acceptable in the past is now unacceptable.

A free market would allow me to operate a movie theater right between three other movie theaters, all next door, and allow me the opportunity to compete for customers on equal terms.

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Bobby Henderson
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 - posted 06-26-2015 07:06 PM      Profile for Bobby Henderson   Email Bobby Henderson   Send New Private Message       Edit/Delete Post 
There are pros and cons with either situation for nearby theaters, be it an allocation setup or both theaters being able to play the same movies.

In theory, an allocation setup can keep a major chain from building right next door to an existing, independently run theater and stealing away all content. But it only works if the allocation setup is FAIRLY diving major studio releases between both theaters. The allocation setup becomes very negative when a major chain (like AMC) starts gaming the setup, making back room deals with major distributors to cherry pick the best titles and denying the rival theater movies it should have been able to play.

LOOK Cinemas in North Dallas has definitely been screwed a few times by AMC since the AMC Village on the Parkway 9 opened. LOOK Cinemas is the better theater in every regard. It may even stay that way even after the AMC location gets its Dolby Cinema system installed.

Big chains can wreak havoc on the little guys even without an allocation arrangement. A small business owner who has his own modest yet nice theater might not stand a chance if AMC, Regal, etc. opened a $25 million multiplex right next door. The independent's most loyal customers might support him, but most people would flock to the big new theater without thinking twice. And that's even if both theaters were able to play the same titles. Profit margins are slim enough at movie theaters that any significant drop of customer traffic could be potentially devastating.

Balancing both perspectives I'm in favor of letting any movie theater play what it wants to play regardless if a theater next door is playing the same movie. In that scenario an independent operator can step up his game with customer service or other things to make his theater stand out from the typical big chain multiplex.

An allocation setup will allow a really crappy theater to survive many years past when it should have been demolished. I put up with that crap here in Lawton for several years.

The Cache 8 Theater (run by United Artists, then Hollywood and finally Wallace) was a rival to the Carmike 8 just over a mile West on Old Cache Road. I think the Cache 8 theater was first built in the early 1980s. The Carmike 8 opened the end of 1994. The Carmike 8 was a much better theater. The close proximity of the two theaters had both in an allocation arrangement. A lot of hit movies that would have been better on the THX-DTS screens at the Carmike 8 played in basic stereo or mono at the Cache 8.

Normally a certain studio such as Disney would release one movie at the Cache 8 theater and put their next release in the Carmike 8. All the studios would flip-flop their releases between the two. Most of the time it was fairly predictable where a certain movie would play. But sometimes the Cache 8 would get a good movie that was supposed to go to the Carmike theater. My theory was it had to do with seat count. As shitty as the Cache 8 theater was, it did have significantly more seats than the Carmike theater. I think this is why circuits like Cinemark often built rooms with rows of seats going right up to kicking distance of the screen. Get the seat count as high as possible to make the theater look impressive on paper even if no one is going to sit in those first 5 or so rows.

The Carmike 8 rarely ever got a favorable hop in the allocation arrangement with the Cache 8 theater. When it did I think it was over its THX houses. Its two THX-certified screens got it booked with the Star Wars: Special Edition movies and Episodes I-III prequels. Titanic did monster business there, selling out both THX houses from December into early April. The Cache 8 was turning into a bargain/2nd run theater when The Lord of the Rings was in its run.

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