CinemaCon 2015: AMC Entertainment CEO responds to clearances allegations

AMC Entertainment Chief Executive Gerry Lopez fired back at the owners of some independent theater chains who have accused the nation’s second largest theater chain of preventing them from receiving first-run movies.

In an interview with the Los Angeles Times, Lopez strongly defended his company’s handling of so-called clearances, a longstanding practice in the industry whereby theaters seek to clear certain zones for themselves, assuring that rivals cannot play the same first-run movies within specific geographic areas.

The Leawood, Kan., chain, owned by China’s Dalian Wanda Group, and other large chains have come under fire from some independent theater owners over their use of clearances, alleging they are violating anti-trust laws by using their market clout to stifle competition.

Lopez denied the allegations.

“The fact of the matter is we are playing by rules that have been long established,” Lopez said in an interview from his hotel suite at Caesars Palace, where he joined thousands of other theater owners and studio executives for the annual CinemaCon convention in Las Vegas.

“It’s not new; the practice has been there forever,” he said. “It’s a quirk that is very specific to this industry.”

Lopez said the allegations were not widespread in the industry.

“There are 600-plus exhibitors in this country,” he said. “There are three or four exhibitors who are irritated by it. My guess is they have made some bad business calls and they’re trying to figure out a way out of a bad situation by alleging stuff and in some cases going to court.”

Nonetheless, the Department of Justice’s anti-trust division has launched an informal investigation into complaints from independent theaters, including Dallas-based Look Cinemas and iPic Entertainment, a Boca Raton, Fla.-based operator of luxury cinemas.

A task force of economists, lawyers and other experts from the department’s anti-trust division have already interviewed at least two theater owners who’ve complained about the practice, The Times reported last week.

The use of clearances developed after a landmark Supreme Court decision in 1948 that required studios to divest their ownership in movie theaters. Clearances were initially seen as a way to guarantee that small, independent theaters would gain access to first-run films, allowing the industry to grow rapidly.

But as the industry has increasingly consolidated — about half of all theater screens are owned by four companies — tensions between large chains and independent theater chains have escalated. Because they control so many screens, big chains have more leverage with studios in terms of where and when movies play across their circuits.

In 2006, the owners of the Palme d’Or, a seven-screen specialty theater in Palm Desert, sued Cinemark, the nation’s third-largest chain. The owners alleged that Cinemark, which operates the 15-screen River Cinema in nearby Rancho Mirage, was illegally muscling them out of the marketplace by threatening to retaliate against movie studios that book films in the Palme d’Or. The case is pending.

Another legal dispute erupted last year when Cobb Theatres sued AMC in U.S. District Court in Georgia. Cobb, which operates 20 theaters, accused AMC of seeking to block its access to films and drive it out of business.

Tom Stephenson, chief executive of Look Cinemas, has been especially critical of Lopez. He recently wrote a letter to studio executives alleging that AMC was using clearances to steer business from a new $20-million multiplex in Dallas to an AMC theater nearby.

Lopez said neither he or other AMC executives have been interviewed by the Department of Justice but that he was taking the investigation seriously.

“Any time the government chooses to examine something it needs to be taken with an appropriate degree of seriousness, whether it is clearances or calorie counts and labels on our menu boards,” Lopez said.

Twitter: @rverrier