Antitrust probe looks into movies

U.S. seeks to know if '48 accord was violated

February 09, 1999|By BLOOMBERG NEWS

WASHINGTON -- A government investigation of the movie studio and theater industry focuses on possible violations of a 51-year-old antitrust settlement that restricts the way films are distributed, sources familiar with the case said yesterday.

Late last week, the Justice Department sent information demands to the nation's top film distributors -- including Walt Disney Co., Viacom Inc.'s Paramount and Time Warner Inc.'s Warner Bros. -- as well as Loews Cineplex Entertainment Corp. and possibly other theater chains, the sources said.

The requests for information, known as civil investigative demands, seek to determine whether companies are engaging in such banned practices as "block booking," a practice in which film distributors sell the right to show a package of movies rather than just one, the sources said.

Justice Department spokesmen confirmed the existence of an investigation into "certain possible anti-competitive practices in the distribution of motion pictures," although they wouldn't elaborate.

In 1948, antitrust enforcers reached a settlement restricting the business practices of nine companies.

The settlement was designed to ensure both that small theater owners got access to top Hollywood films and that small movie makers had a fair chance to get their products on screen. It effectively required entertainment companies to distribute their products on a movie-by-movie, theater-by-theater basis.

The accord barred film distributors from requiring theaters to show less-popular films as a condition of running the most highly demanded releases. It also prevented studios from demanding that cinema chains show movies in multiple theaters.

In addition, the settlement limited the ability of cinemas to demand "clearances" -- the exclusive right to show a film in a geographic area.

Other movie companies receiving requests included News Corp.'s 20th Century Fox, Metro-Goldwyn-Mayer Inc., Seagram Co.'s Universal Studios and Sony Corp.

A spokeswoman for Loews said that company received a Justice Department request, while rival AMC Entertainment Co. said it hadn't been contacted.

Some industry officials said they were puzzled that the government would dust off a half-century-old settlement. Antitrust officials may have received a complaint from a disgruntled cinema, distributor or movie maker, said William Kovacic, an antitrust professor at George Washington University law school.

"It would be more likely than not that the tripwire for this is a complaint by an industry participant," Kovacic said.

Pub Date: 2/09/99

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