AMC Theaters Blamed for Depriving Spanish-Only Moviegoers of 'Star Wars'

Star Wars Line - H 2015
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This weekend was a big one in movieland, but according to one shuttered theater operator in Houston, it could have been even bigger.

"Today, the movie Star Wars: The Force Awakens opens in wide release in the United States," reported Viva Cinema to a federal judge on Friday. "The opening is widely expected to break every attendance record in history. But if you are one of over 200,000 Houstonians who understand Spanish but not English, you will be out of luck. You won’t be able to see Star Wars in Houston in Spanish — either dubbed or with subtitles — and there is one simple reason why ... "

Viva alleges that theatrical exhibition giant American Multi-Cinema and major Hollywood studios have conspired to run Houston's only first-run Spanish language theater out of business. The focus of Viva's antitrust lawsuit focuses on "clearance" pacts that carve out which theaters are getting exclusivity on first-run films in certain geographical areas.

It's a subject that continues to be investigated by the Department of Justice, according to securities filings by AMC and Regal Entertainment. In the meantime, the two companies are facing a handful of lawsuits around the nation such as the one filed in Texas by Viva.

In November, AMC brought a motion to dismiss that argued that since many Hispanics speak English, there's really no product market for Spanish-subtitled or Spanish-dubbed films in the Houston, Texas marketplace.

Viva says this assessment "insults Hispanics who reside in Houston but do not understand English, arguing that because they comprise less than ten percent of the population, they somehow are too small of a consumer market to enjoy the protection of federal antitrust laws."

Here's Viva's full brief, which poses AMC's alleged coercing of distributors as "especially egregious" given that Houston is America's fourth-largest city with the third largest Hispanic population.

The legal papers were filed on the same day that Regal made a move in one of its own cases. Over in New York, Regal is facing an antitrust action from Cinema Village Cinemart. There, the subject of exhibition exclusivity is also in controversy, but Regal asserts the plaintiffs don't have enough to move forward.

According to Regal's motion to dismiss (here), "CVC has failed to state a claim under Section 1 of the Sherman Act because it does not plausibly allege clearance agreements between Regal and film distributors, as opposed to unilateral decisions by distributors about whether to license a given film to CVC or to Regal."

Regal frames the issue as one of a "free and fair competition to license first-run films," saying that there was nothing wrong with its alleged act to refuse to play American Sniper last January after Warner Bros. gave the film to Cinemart.

Afterwards, Warner Bros. "revoked its alleged commitment to license all its first-run films simultaneously to the Cinemart and the (Regal) Midway," and in Regal's eyes, that's a "unilateral decision" evidencing a distributor like Warner Bros.' own economic best interest.

"Specifically," continues Regal, "it stands to reason that a distributor seeking 'to earn as much revenue as possible' would choose to license these blockbuster films to play at the Midway — an 'upscale' and 'modern' nine-screen multiplex theatre with stadium seating located on the 'very wide' 'main thoroughfare' in Queens — rather than at the Cinemart — an older and smaller five-screen 'slightly graded slope style' theatre that is located on a side street 'known for its antique shops' and that relies on senior citizens as 'its main customer demographic.' "

Past decisions at the initial stage in other lawsuits have been mixed. In California, Regal beat one lawsuit while in Georgia, AMC failed to escape litigation over clearance pacts. The year 2016 is primed to become an important one in the ongoing strife between independent theaters and exhibition giants with several judges due to weigh in with new opinions and with the Justice Department possibly taking its own actions. Last week, the DOJ forced AMC to divest a couple of theaters in a merger, but held back on a wider antitrust move that would put Hollywood dealmaking under the microscope during an election season.