Following up on a complaint from an independent movie theater in Palm Desert, Calif., the California Attorney General's Office has renewed its investigation into the booking practices of Century Theat
(The Hollywood Reporter) -- Following up on a complaint from an independent movie theater in Palm Desert, Calif., the California Attorney General's Office has renewed its investigation into the booking practices of Century Theatres, the San Francisco Bay Area-based theater chain.
The circuit, which is up for sale, has been the subject of an investigation since July, when a San Jose, Calif., theater complained about Century's business practices. But the Attorney General's Office has taken a renewed interest in Century because Cinema Palme d'Or, an indie theater in Palm Desert, Calif., is charging that Century is using its circuit size to force distributors to keep product out of the Palme d'Or in favor of the nearby venue called Century Theatres at the River.
Century Theatres declined comment.
According to Tom Dresslar, a spokesman for Attorney General Bill Lockyer's office, the California Department of Justice is investigating booking practices in a number of areas in California. At this point the investigation involves only Century, but Dresslar said if his office receives allegations of problems with other theater chains, then, "We will make it part of our investigation."
Steve Mason, one of the owners of the Palme, asserted that because he and his partners reopened what had been known as Resorts Theatre -- a nine-screen theater featuring art house and high-end commercial product -- in October 2003, the theater has been shut out of most of the commercial product it hoped to screen. He also charged that recently even more commercial art house fare has been going to Century as well.
According to a source in the Attorney General's Office, subpoenas for all the major distributors are pending. "We're trying to help the little guy," the source said. "We want to help stabilize competition so people have a choice."
Mason said that when the theater opened in fall 2003 after a $1 million renovation, it hoped to book such desirable films as Miramax Films' "Kill Bill-Vol. 1," Universal Pictures' "Intolerable Cruelty" and Warner Bros. Pictures' "Mystic River." But the films' distributors decided to go with the Century theater instead. Since then, the Palme has handled mostly "move over" product -- smaller films that opened first at Century's theater, then moved to the smaller Palme d'Or venue as well as art house fare.
"We opened to be a high-end commercial theater like (Pacific Theatres') the Arclight, and over the summer we've done really well with art titles," Mason said. "But now Century is basically cherry-picking the very best art titles and leaving us without a niche. We're also offering eight-week guarantees on some pictures. We know how to nurture pictures to make them work.
"Century is using their size and number of screens to make it impossible for distributors to make a decision based on our own property," he said.
According to Mason and studio distributors, the two theaters, which are just a mile apart, are in a clearance situation. Under a clearance, if a distributor books a film at one location, it agrees not to book the same film at a nearby competing location.
The clearance that exists between the two Palm Desert theaters was in place before Mason and his partners took over the Palme d'Or property.
"(Century's River) has a clearance, and clearances are legal," said Erik Lomis, president of distribution at MGM. "Exhibitors always ask for clearances, and it's up to the distributor to grant the clearance or not grant the clearance. Palm Desert is a good market, but you don't want to play theaters right next to each other. For certain types of film, more specialized film, you want to play the d'Or, but for more commercial films you want to play the River."
Mason noted that in October, the Palme was able to book Universal Pictures' "Ray," the first mainstream studio film to play at the venue. But though "Ray" earned solid grosses at the Palme, the theater was not able to secure Universal's upcoming "The Interpreter." Mason also charged that Universal told him it would return to selling 100% of its product to Century's theater.
Universal president of distribution Nikki Rocco declined comment. But the sale of "Ray" might have been more of a favor to "Ray" co-producer Alise Benjamin, who also happens to co-own the theater.
Dresslar confirmed that clearances are legal as long as the two theaters are in substantial competition with each other.
"There is nothing that prohibits a studio from discriminating against any theater and nothing that prohibits a theater from demanding exclusivity," he said. "In terms of assessing antitrust violations, the key question is whether the two theaters are in substantial competition. One factor in assessing that is location. If they are across the street, they are in substantial competition, and it makes it less of an antitrust issue. If they are farther away, the antitrust concerns rise with distance. If an independent theater is completely denied access to product, then that raises potential antitrust issues as well."
Century has been the focus of both state and federal investigations in the past. The company was the subject of a federal suit in San Francisco District Court in 1996 for its alleged attempts to monopolize the Las Vegas market. The federal government lost that suit.
More recently, the indie theater chain Camera Theatres in San Jose brought a complaint against Century. In that instance, Century dropped its clearance shortly after the California DOJ investigation began.