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Topic: Four Independent Film Exhibitors File Antitrust Suit Against Landmark Theatres
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Harold Hallikainen
Jedi Master Film Handler
Posts: 906
From: Denver, CO, USA
Registered: Aug 2009
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posted 09-27-2017 12:31 PM
FOR IMMEDIATE RELEASE
Sept. 27, 2017
Four Independent Film Exhibitors File Antitrust Suit Against Landmark Theatres
Four independent film exhibitors today filed a lawsuit in the U.S. District Court for the District of Columbia against Landmark Theatres, a national chain of specialty film theaters, claiming that Landmark, in violation of federal antitrust law, has denied them access to specialty films they sought to exhibit.
The Denver Film Society (DFS), Cinema Detroit, West End Cinema, and the Avalon Theatre (the latter two of Washington, D.C.) are seeking relief from Landmark’s unlawful anticompetitive practices. Specifically, the plaintiffs allege that Landmark uses its market dominance to demand exclusive rights to screen specialty films, resulting in no local competition for those films despite consumer demand.
“We did not reach this decision lightly,” said Andrew Rodgers, Executive Director of the Denver Film Society. “After years of trying to work within the system and talking with partners and peers about how we can overcome the unfair competition we face from Landmark, we have come to the painful conclusion that this is a nationwide problem that affects the entire independent film community. The deck is stacked against community theaters like ours, and the only way we can solve the problem we all face and serve our audiences properly is to seek a remedy through the courts.”
To exhibit a film, a movie theater must obtain a license from the film’s distributor, which is responsible for marketing the film and acting as a middleman between the production studio and the theater.
The suit claims that Landmark’s business practice of “clearing” films – an agreement limiting a film distributor’s ability to provide other theaters with a license to screen a desired film to the public – is harming marketplace competition by excluding independent movie theaters from screening the specialty films necessary to their competitive success. In addition, the process is reducing output, restricting price competition, and denying moviegoers their choice of theaters to see select films.
Landmark, a private corporation that forms part of a group of companies owned by venture capitalist Mark Cuban, is the self-described dominant theater chain, with a nationwide “circuit” dedicated to exhibiting specialty films in the United States. The company operates 51 theaters with 242 screens in 22 major metropolitan areas, including theaters in each of the plaintiff’s local markets, Denver, Detroit, and Washington, D.C.
Landmark controls most theaters and screens showing specialty films in the plaintiffs’ locations – and uses its national “circuit” power to prohibit independent theaters from showing those films. The result is that these independent theaters, many of them run as non-profits, are often prohibited from showing the high-profile specialty films its audiences want to watch, injuring the theaters’ economic prospects.
In Washington, D.C., Landmark repeatedly blocked West End Cinema from showing films at the same time as its own theaters, forcing the theater to shut down in 2015. One month after West End Cinema closed, Landmark acquired the building lease and opened its own theater. “After more than four years of unrelenting anticompetitive squeezing by Landmark, I was forced to close West End Cinema on March 29, 2015 – which was followed less than one month later by an announcement that Landmark was leasing the space and ‘reopening’ it as the Landmark West End Cinema,” said Josh Levin, a co-founder of West End Cinema. “So they killed me and my business, then moved into my house.”
The other three theaters represented in the suit allege that Landmark’s anticompetitive practices and the continued use of its national “circuit” power prevent them from obtaining desirable specialty films.
In Washington, D.C., the Avalon Theatre has faced significant competitive challenges with Landmark since the Avalon opened as a nonprofit in 2003.
In Denver, since 2010 when it opened the Sie FilmCenter, the nonprofit Denver Film Society has been unable to book a single film that Landmark was also showing locally at one of its theaters.
In Detroit, the local Landmark and Cinema Detroit are the only two theaters that show specialty films. Although the theaters are more than 11 miles apart, Landmark still prevents Cinema Detroit from showing almost every specialty film.
“I wish that this legal action was avoidable,” said Paula Guthat, co-founder of Cinema Detroit. “Unfortunately, Landmark actively engages in unfair business practices that limit our ability to screen certain types of films in the metro Detroit market. It’s unfair to us as a business and to our patrons who look for Cinema Detroit to offer the best in independent films and documentaries.”
Last year, Landmark filed a similar lawsuit against Regal Entertainment Group, another national theater chain, accusing Regal of similar anticompetitive conduct aimed at Landmark with respect to commercial films.
“Landmark went to court to fight against clearances for the films it wanted to show,” said Bill Oberdorfer, Executive Director of the Avalon Theatre. “We are doing the exact same thing and simply asking for the same opportunities with respect to specialty films.”
The suit seeks monetary damages and an injunction prohibiting Landmark from seeking clearances against plaintiffs’ theaters. The plaintiffs are represented by Hausfeld, a global litigation firm with expertise in antitrust law.
About the Avalon Theatre
Avalon Theatre Project, Inc. is a nonprofit, community-supported film and education center in Washington, D.C., which runs the two-screen Avalon Theatre, the oldest operating movie house in the area. The historic Avalon Theatre has been a cornerstone of Northwest D.C. since its opening in 1923, and offers exciting and diverse film programming in a comfortable and accessible venue. Avalon Theatre contact: Bill Oberdorfer (bill.oberdorfer@theavalon.org or 202-966-2149)
About Cinema Detroit
Founded in 2013 by two lifelong Detroiters, Cinema Detroit is a nonprofit movie theater located in Detroit, Michigan. As Detroit’s only seven-day-a-week truly independent movie theater, Cinema Detroit aims to deliver an eclectic, quirky, and quality mix of films in the heart of the city and provide a community gathering place for the community dialogue that they spark. Cinema Detroit contact: David E. Rudolph at D. Ericson & Associates Public Relations (dericsonpr@gmail.com or 313-605-3600)
About Denver Film Society
Founded in 1978, the Denver Film Society (DFS) is a nonprofit organization located in Denver, Colorado, that provides specialty film programming to the Denver community through year-round screenings, film festivals, and other special events. DFS operates a single, three-screen theater, the Sie FilmCenter, and produces the annual Denver Film Festival. Denver Film Society contact: Marty Schechter (marty@schechterpr.com or 303-987-8163)
About West End Cinema
West End Cinema was a three-screen art house cinema in Washington, DC from 2010-15, dedicated to bringing audiences the best in independent, foreign and documentary films. West End was named Best Independent Movie Theatre in DC (Washington CityPaper); Best Movie Theatre Food Selection in DC (Washington CityPaper); and Best Popcorn in DC (TBD.com). West End Cinema contact: Josh Levin (josh@westendcinema.com or 212-300-6086)
About Hausfeld
Hausfeld is a leading global law firm with offices in Berlin, Boston, Brussels, Dusseldorf, London, New York, Philadelphia, San Francisco, and Washington, DC. The firm has a broad range of complex litigation expertise, particularly in antitrust/competition, financial services, sports and entertainment, environmental, mass torts, consumer protection, and human rights matters, often with an international dimension. Hausfeld contact: Sathya Gosselin (sgosselin@hausfeld.com or 202-540-7175)
https://www.denverfilm.org/2017/09/27/four-independent-film-exhibitors-file-antitrust-suit-landmark-theatres/?utm_source=DFS+Master+List&utm_campaign=9984c0c7dd-EMAIL_CAMPAIGN_2017_09_27&utm_medium=email&utm_term=0_92a68d8fde-9984c0c7dd-119840273
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Harold Hallikainen
Jedi Master Film Handler
Posts: 906
From: Denver, CO, USA
Registered: Aug 2009
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posted 09-28-2017 12:54 PM
This is an interesting issue. In general, I think a manufacturer has the right to determine how the product is sold (though there are limits, such as they cannot tell authorized resellers what price to sell for, though they used to be able to do that under "fair trade" laws). A manufacturer can decide to only sell direct, sell through a limited set of dealers, or whatever. Similarly, in television, network affiliation and syndicated programming is generally sold on a market exclusivity basis. Cable television systems are not allowed to import a syndicated program on a channel they normally import into a market if a station in that market has an exclusivity agreement with the program producer ( see http://mai.hallikainen.org/org/FCC/FccRules/2016/76/101/ ). Exclusivity makes the program more valuable to the station, so the distributor can charge more for it.
Exclusivity agreements are very common in various businesses. When it becomes anti-competitive is the question. That's something for the courts to decide.
Harold
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Martin Brooks
Jedi Master Film Handler
Posts: 900
From: Forest Hills, NY, USA
Registered: May 2002
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posted 11-02-2017 07:21 PM
quote: Harold Hallikainen
In general, I think a manufacturer has the right to determine how the product is sold (though there are limits, such as they cannot tell authorized resellers what price to sell for, though they used to be able to do that under "fair trade" laws).
It used to be that manufacturers could only dictate minimum advertised prices (MAP) and not minimum selling prices (MSP). That's why we had "recommended selling prices" which were considered the "list price". But the Supreme Court ruled some years ago that manufacturers could indeed dictate minimum selling prices and that's why a lot of products are sold only at list price or within $5 of that price. You see this with cameras and many consumer electronics, especially at the high end.
That ruling never made sense to me and seemed to reek of price fixing.
Back around 1990 when I worked in publishing and we were doing a deal with a distributor to create a special version of a product for them, as soon as we walked into the meeting, we were told by the lawyers that the one thing we could not discuss was the price they would sell the product for. We could negotiate wholesale prices, but not retail. But as I understand the subsequent Supreme Court ruling, if we were doing the deal today, we could dictate a minimum selling price.
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