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On Friday, American Multi-Cinema attempted to extinguish an antitrust lawsuit by telling a judge that since many Hispanics speak English, there’s really no product market for Spanish-subtitled or Spanish-dubbed films in the Houston, Texas marketplace.
AMC is fighting Viva Cinemas Theaters, which claims that distributor-exhibitor “clearance” pacts carving out exclusivity on first-run films have harmed the Spanish-speaking Houston film-going public. According to the complaint, Disney, Paramount, Warner Bros. and other studios have acquiesced to AMC’s demand that they license recently released blockbuster films to its theater in Dunvale, Texas instead of Viva’s own theater for Spanish-speaking patrons less than three miles away. Viva says it went out of business as a result.
In reaction to the antitrust action, AMC is attacking whether the plaintiff has sufficiently described a relevant product market, a requirement in attempts to assert monopolization under Sections 1 and 2 of the Sherman Act. The exhibition giant is posing its own marketplace behavior as legitimate competition.
“Viva’s allegations describe a business model directed at competing for Hispanic, Spanish-speaking patrons and also detail how Hispanics, as a population, are enthusiastic movie-goers who attend Hollywood films in the United States more frequently than non-Hispanics,” states AMC’s legal brief (read in full here). “Not surprisingly, in light of that frequent patronage, AMC values and competes vigorously for these Hispanic patrons as a key part of AMC’s business model, a fact Viva is forced to concede.”
AMC continues by saying that Viva, in seeking to define a submarket for “Spanish-language” films, wants a Texas federal court “essentially to disregard Hispanic patrons who speak and understand both English and Spanish … and instead to evaluate the relevant product market solely based on the alleged preferences of the small subset of Spanish-only speakers. That approach is fundamentally flawed…”
The key issue here is whether AMC’s films in English are “interchangeable” for many Hispanics with Viva’s films containing Spanish subtitles or dubbing.
As part of the analysis, AMC makes use of Viva’s statistical data in an attempt to confirm that an “overwhelming majority” can see films at either theater. AMC points to word that 85 percent of Hispanics go the the movies each year, that Houston’s Hispanic population is 43.8 percent, that approximately 20 percent of Hispanics speak only Spanish and so forth.
“Thus, based on these pleaded statistics, only approximately 7 percent of Houstonians are Hispanic moviegoers who exclusively speak Spanish,” says AMC doing the math. “Even adding in the bilingual individuals who allegedly ‘prefer’ Spanish media, that amounts to only about 12 percent of Houstonians.”
AMC provides a diagram, which is is pictured above.
In a footnote, AMC uses a soft drink analogy to shrug off what the preferences of Hispanics might be.
“Many soda drinkers strongly prefer Coke over Pepsi, and vice versa,” says AMC. “But that ‘preference’ does not somehow suggest that Coke and Pepsi are in different markets, even if some subset of Coke drinkers might have such a strong preference that they would never switch to Pepsi, no matter how much the relative price of Coke increased.”
AMC also frames the issue this way: “In other words, for every one Houston movie-going Hispanic who allegedly could not see an English-language film, there are at a minimum four Houston Hispanic moviegoers who would find the English-language film and its Spanish- subtitled or -dubbed version interchangeable.”
Because of this, plus an alleged failure by Viva to plead a relevant geographic market, AMC wants the antitrust lawsuit dismissed. The defendant is currently fighting other antitrust lawsuits on the “clearance” front (as is Regal Entertainment) while the Department of Justice makes its own investigation of the way that big exhibitors have allegedly used their nationwide might to coerce studios into holding back first-run movies from independent theaters.
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