Chain investigated for possible antitrust violations
California Attorney General Bill Lockyer is investigating the booking practices of Century Theaters for possible antitrust violations.
Prosecutors haven’t disclosed the details of their investigation, but sources said the question at issue is whether Century is using its circuit clout in negotiations with distribs to get clearance over independent theaters and in effect starve their local competition of product.
“We launched an investigation,” said Tom Dressler, spokesman for the attorney general. “It is part of a broader antitrust investigation. The question is whether booking practices violate antitrust laws.”
Century execs did not respond to requests for comment. Exhib, the nation’s seventh-largest, operates over 1,000 screens, primarily in California and other Western states.
Inquiry began several months ago after complaints from Camera Cinemas alleging that its theater in downtown San Jose, the Camera 12, was being denied film because of Century’s clearance demands for its theaters.
The experiences of other independent exhibs in the state, including the Palme d’Or in Palm Desert and Cinema West in Marin County, are also being reviewed by investigators.
Clearance is the term for when a distributor grants an exhibitor the exclusive license to play a particular film in its area. While a fairly common practice in film booking, it has given rise to numerous lawsuits when theaters that are “cleared” believe the arrangement is being used unfairly against them.
Robert J. Rose, an attorney at Sheldon & Mak, who represents studios in distribution and antitrust matters, said an antitrust prosecution over clearances would be a first.
“It would be novel for a government entity to be involved in a clearance issue, which has predominantly been handled in private litigation,” he said.
Following a mammoth federal antitrust case, the movie industry was radically reshaped by the Paramount Consent Decree, which studios signed in 1949 and remains in effect today.
The decree, which only covers the original signatories, stipulates that clearance be granted only when theaters are in “substantial competition” with each other, Rose said. “The fact is in the 55 years since, not once did the government seek to enforce that provision.”
While Century is the focus of the attorney general’s probe, studios could also find themselves implicated in an antitrust action since they are the ones who grant clearances in their film license agreements with exhibs. Sources said that several studios had been served with subpoenas connected to the probe. The rep for the A.G. declined comment on subpoenas.
Steve Mason, a co-owner of the Palme d’Or, said the theater had been consistently denied major studio product because Century at the River, two miles north on Highway 111 in Rancho Mirage, clears his theater.
The reason, he alleged, is that Century had threatened to pull runs of a studio’s titles throughout its circuit if they booked the Palme.
“Century has absolutely been using its size to keep product away from us,” Mason said. “I’ve had distributors say to me that they cannot sell me a movie because Century will deny them runs on any of their screens.” He declined to identify which distribs had made such claims.
Jack Nyblom, a co-owner of Camera Cinemas in San Jose, said Century has long been aggressive about clearance issues. But when he opened the Camera 12 last summer, he began to fight the company, enlisting local politicians, who eventually brought the matter to Lockyer’s attention.
Last summer, things came to a head, he said, with DreamWorks’ booking of “The Terminal.” Century wanted clearance for its theaters along Winchester Boulevard, five miles away from the Camera 12.
When DreamWorks refused to honor the clearance, Century declined to play the pic at its San Jose theaters and Camera got the booking. The pattern repeated with “Collateral” late in the summer. But beginning with the studio’s October release of “Shark Tale,” the Camera 12 and Century’s Winchester theaters now play day and date with each other.
But Nyblom says he is still having trouble with his Camera 7, which is 2½ miles north of the Century theaters.
“We hear from the Century folks that this is all about competition, and we think it’s the opposite. The way we look at it, it’s restraint of trade,” he said.
Dave Corkill, owner of Cinema West, which has several theaters in Marin Co., sued both Century and Lions Gate Films last summer after it couldn’t book “Fahrenheit 9/11.” The suit has since been settled, and he said his theaters now play day and date with Century’s locations as well.
Nearly 20 years ago, Century chairman Raymond Syufy was the target of a major federal antitrust investigation alleging that he had cornered the exhibition of firstrun films in Las Vegas after merging his theater company with competing chains.
But after a lengthy litigation, a federal judge dismissed the case in 1990 with marked disdain, noting, “It is a tribute to the state of competition in America that the Antitrust Division of the Dept. of Justice has found no worthier target than this paper tiger on which to expend limited taxpayer resources.”