Film-Tech Forum ARCHIVE: AMC vs Cobb Theatres

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Posted by Don Furr (Member # 1469) on 01-25-2014, 02:50 PM:

Can't find Hollwood blockbuster films at your local Cineplex? According to one Georgia-based movie theater chain, that might be AMC Entertainment's fault.

Cobb Theaters has filed a federal antitrust lawsuit in Georgia, alleging AMC has used its worldwide market power to coerce film distributors to deprive competitors of access to studio films.

AMC owns about 350 theaters with more than 5,000 screens in North America. It's the second-largest theater circuit in the U.S., and after being acquired by Chinese conglomerate Wanda Group, wields enormous power as the world's largest cinema operator. Now the question is whether AMC is abusing that power. Last July, two U.S. government agencies and three Chinese authorities blessed the merger and presumably reviewed any antitrust concerns.

STORY: James Cameron Wins Yet Another 'Avatar' Theft Lawsuit

Cobb, which owns 19 theaters and 231 screens in the Southeast region, isn't satisfied.

According to the complaint, "Dominant exhibitor circuits like AMC derive substantial market power from their ability to provide numerous exhibition locations or runs simultaneously to distributors for the wide release of a film, including locations in non-competitive zones where a distributor has no other alternative exhibitor to play a film."

The plaintiff says it beat AMC in the leasing of a space for a theater in Georgia, and afterward, AMC's head film buyer sent a letter to major film distributors demanding preferential or exclusive licensing treatment over Cobb's new theater.

Cobb says major film studios complied with the demand, and as a result, they've been shortchanged on the bigger movies.

"For example, between January 1, 2013 and October 27, 2013, the only films released in 2013 that Sony Pictures licensed to the Brookhaven CineBistro were Elysium and Captain Phillips," says the lawsuit. "During the same time period, Sony Pictures licensed to one or both of AMC’s Buckhead theaters After Earth, The Amazing Spider-Man, Battle of the Year, The Call, Carrie, Evil Dead, Grown Ups 2, The Mortal Instruments, One Direction: This Is Us, This Is the End, White House Down, and Zero Dark Thirty."

"And Warner Bros. Pictures conditioned its license of The Hobbit: The Desolation of Smaug to the Brookhaven CineBistro on the Brookhaven CineBistro’s agreement to play the film on 4 of its 7 screens," continues the lawsuit.

Such arrangements historically are not too unusual, but now Cobb is charging AMC with "attempted monopolization of the market for film licenses" in its region and a "ruthless campaign to prevent Cobb from competing with AMC."

Cobb is demanding trebled damages, disgorgement of profits and an injunction against AMC from continuing to engage in alleged anti-competitive conduct.

AMC declined comment.

http://www.hollywoodreporter.com/thr-esq/amc-accused-coercing-film-distributors-673777

Posted by Terry Lynn-Stevens (Member # 7349) on 01-25-2014, 05:52 PM:

I don't see what the issue is if two chains are in a competitive zone and one of the chains offers more favorable terms.

Posted by Edward Havens (Member # 4715) on 01-25-2014, 06:23 PM:

I remember back in the late 1980s, a small theatre in Santa Cruz sued UATC (the company I was working for at the time) on a similar charge. Turned out, it wasn't that UA was trying to stop this theatre from booking top movies, but that the studios didn't want to deal with the prick who owned the theatre, or show their movies in his substandard, crappy, tiny, converted from a bike shop "cinema." Even Cannon and Troma wouldn't show their worst films there. The case was thrown out of court.

In this case, Cobb claims to have an email from an AMC employee that backs up their claim. I would be interested in hearing how they acquired said email.

Posted by Marcel Birgelen (Member # 6801) on 01-25-2014, 07:43 PM:

quote: Terry Lynn-Stevens
I don't see what the issue is if two chains are in a competitive zone and one of the chains offers more favorable terms.

I also don't know what the issue could be? Monopolistic power abuse is considered perfectly normal those days...

Posted by Mike Blakesley (Member # 26) on 01-25-2014, 09:00 PM:

quote: Terry Lynn-Stevens
I don't see what the issue is if two chains are in a competitive zone and one of the chains offers more favorable terms.

The article doesn't say anything about terms. (AKA rentals.) Only that AMC "demanded preferential treatment." I would bet that demand could be boiled down to, "give us your big movies exclusively or we won't play ANY of your movies at ANY of our locations." As always...money talks.

Posted by Lyle Romer (Member # 1266) on 01-25-2014, 11:23 PM:

Especially with digital cinema, exclusive zones should be a thing of the past. As long as your per capita to the studio equals the competitor you should be able to compete day and date even if you are next door.

The zone system can kill a location. For example if I have a successful independent location, Regal can open up a mile away and keep me from getting half the product. They can afford to subsidize losses but I won't be able to.

Posted by Bobby Henderson (Member # 840) on 01-26-2014, 12:32 AM:

The thing I don't understand: large movie theater chains compulsively play almost nothing but major Hollywood studio content. So what sort of leverage would AMC have over the big movie studios in forcing them to give AMC preferential treatment? Just what the hell else is AMC going to play other than major Hollywood studio movie releases. Some bullshit from China with subtitles? I don't think so.

If I was a major studio executive I would think, "hey, the more screens that are playing my movie the better!" Why in the hell would I want to limit my big movie title only to AMC branded screens? It doesn't make any sense.

OTOH, I don't put it past movie studio executives from making really stupid damned decisions. With some of the stunts these guys have pulled over the past few decades I can't help but wonder if all their waking hours are spent stumbling around in a cocaine-induced haze.

Take for instance those stupid allocation agreement things. Two theaters in close proximity to each other are forced to play different movies. They can't ever play the same movie from the same studio (which would make the two theaters compete in terms of customer service and presentation quality). If I was a studio head I would be trying to figure out how to get my movie playing in every single movie theater location in the country, even if some locations were across the street from each other.

A studio head giving a movie theater chain any preferential treatment makes not the slightest bit of sense. Not unless the theater chain is kicking back a serious amount of money for the favor.

Posted by Louis Bornwasser (Member # 3063) on 01-26-2014, 05:56 AM:

Unless?

Posted by Rick Raskin (Member # 1561) on 01-26-2014, 10:33 AM:

Collusion with a supplier for the purpose of eliminating competition certainly rings anti-trust to me. Easier to say than prove.

Posted by Bobby Henderson (Member # 840) on 01-26-2014, 10:42 AM:

I don't know the organizational structure of Wanda (AMC's China-based parent company) and how much, if any, cash they have to burn on kick-backs to movie studios. AMC has been in and out of bankruptcy in previous years, so in their former state of ownership I wouldn't guess they would have had much of any money to use for kick-backs to movie studios.

With movies being distributed on reusable, portable hard discs or beamed by satellite it's not a problem for a major studio to have its movie play however many screens it wants, be it 2000, 10,000 or even 20,000 screens. The movie studio will probably make more money flooding the cinema market with its product. A lot of people only see movies at the theater nearest their home. Why not try to have the movie playing at every theater location possible?

If anything I could see smaller movie studios taking aim at the handful of big Hollywood movie studios with anti-trust cases. I could see major studios saying, "don't play any movies from this indie studio; we'll stop letting you play our movies if you do play their movies."

Posted by Martin McCaffery (Member # 37) on 01-26-2014, 10:49 AM:

quote: Bobby Henderson
So what sort of leverage would AMC have over the big movie studios in forcing them to give AMC preferential treatment? Just what the hell else is AMC going to play other than major Hollywood studio movie releases. Some bullshit from China with subtitles? I don't think so.

This is not to contradict you, but AMC has been doing well playing Bollywood movies here on one screen. So who knows?

We art house theatres have been dealing with this problem forever. When a distrib thinks they have an artish film that will crossover, they put it in the multiplex. Sometimes it will do, ok, but never great. Meanwhile, we pick it up a month later and do better than twice the gross the multiplex did. Does that make the distrib think they should try us first in the future? Nope. They have to get it out on the break to as many screens as possible. Sometimes that's contractual, usually just the delusion that it will do better in the multiplex.

Posted by Terry Lynn-Stevens (Member # 7349) on 01-26-2014, 02:30 PM:

quote:
ust what the hell else is AMC going to play other than major Hollywood studio movie releases. Some bullshit from China with subtitles? I don't think so.

Bobby, perhaps you should check out the AMC website AMC Chinese Cinema

quote: Bobby Henderson
Just what the hell else is AMC going to play other than major Hollywood studio movie releases.

AMC will play anything they can get their hands on. They have Bollywood, Independent, Chinese and even the opera playing in their cinemas in North America.

Posted by Edward Havens (Member # 4715) on 01-26-2014, 02:50 PM:

Cobb's complaint says it's been happening starting before Wanda bought in to the US market.

Posted by Sam D. Chavez (Member # 1841) on 01-26-2014, 04:07 PM:

The scenario of a big chain getting preferential treatment over a smaller exhibitor has resulted in lawsuits and settlements for the littler guy a number of times. It's even gotten some companies their seed money to grow.

I don't think it's about kickbacks, it's more like a little harmless blackmail. On the studio end they won't give the "tentpole" unless you play the dreck or offal as well. The rules evolve as always.

The owners used to do a product split among themselves. Easy to do informally. Eventually stopped.

Posted by Mike Rivest (Member # 5500) on 01-29-2014, 05:57 PM:

Same thing happened in the late 1990's, Cineplex and Famous Players VS Guzzo
http://www.cinemasguzzo.com/about-us.html

"June 1998 marked the beginning of a major legal debate on film monopoly. Mr. Vincenzo Guzzo took an active part in this struggle which opposed independent movie theatre owners to industry giants such as Dreamworks (Coscient International), Famous Players, Cineplex Odeon and Paramount. In July, an injunction was filed in Provincial Court against Dreamworks for their refusal to distribute their films. The parties have now come to an agreement. Other complaints have been filed against Famous Players and Cineplex Odeon for disloyal practice and against Paramount for refusing to distribute their films to Famous Players' competitors. Mr. Vincenzo Guzzo is in charge of this hot, ongoing issue."

I also dug through the La Presse archives at BANQ and found the same thing in the 1980's.

I am willing to bet that the same thing happens in Milwaukee and Memphis (who cities has theatres mostly from one chain.)

Posted by Sam D. Chavez (Member # 1841) on 01-29-2014, 08:17 PM:

One of the most interesting cases in the late '80's was Syufy suing AMC for monopolizing the San Jose film market. Syufy was a very powerful exhibitor back then and had the hubris to sue AMC because they lost a couple of films to them. AMC did not have much presence in that market back then.

Anyone working in this area knew how absurd this claim as the truth was the other way around with crappy split mushroom domes (with seats still pointing in the wrong direction) as far as the eye could see, all playing great titles on the break, while the competition was starving for product.

Turned out the judge was not sympathetic and ruled in AMC's favor to the tune of Twelve Million dollars.