At a time when the box office is booming, the business practices of the nation’s largest theater chains are coming under growing scrutiny by the federal government.
The U.S. Justice Department recently ordered Regal Entertainment Group, AMC Entertainment Holdings Inc. and Cinemark Holdings Inc. to supply documents as part of a widening investigation into whether the largest theater chains violated federal antitrust laws, three people familiar with the investigation told the Los Angeles Times.
The government is examining allegations from independent theater owners across the country that the big chains are using their market clout to block smaller rivals from receiving first-run movies.
The issuance of civil investigative demands, or administrative subpoenas, signals a significant escalation in the Justice Department probe, which launched several months ago but has accelerated in recent weeks, The Times reported Tuesday..
The department also has assembled a task force of attorneys and economists to examine a business practice known as clearances — license agreements in which theaters obtain permission from studios to exclusively show first-run movies in their theaters within certain zones, thereby blocking nearby rivals from playing the same movie at the same time, according to The Times.
Task force members already interviewed executives from at least three independent theaters in Florida, Texas and Kansas, people with knowledge of the probe told The Times. This week they are expected to meet with executives with Cobb Theatres, a chain that is based in Birmingham, Alabama, and runs 20 theaters, according to The newspaper.
The investigation is being closely watched in the exhibition industry and in Hollywood because it could force changes in how major motion pictures are distributed and lead to costly fines for the big chains, The Times reported.
—City News Service