Theater chain sued by Icon

Icon Distribution, a division of Mel Gibson’s Icon Productions, is suing the Regal Entertainment Group for more than $40 million, claiming that the nation’s largest theater chain failed to pay Icon its fair share of box office receipts for “The Passion of the Christ,” which has taken in about $370 million in the U.S. and Canada alone.

In the suit, filed Monday in Los Angeles Superior Court, Icon alleged Regal backed down on a commitment to “studio terms” under which the chain -- which operates 6,020 screens in about 545 theaters worldwide -- was to pay the company 55% of the box office revenues.

“We were attempting to resolve this informally,” said George Hedges, a partner in the law firm Quinn Emanuel who is representing Icon. “They low-balled us, offering 34% instead. Being an independent [instead of a major studio] was a factor. They think they can push us around because of their size. ‘The Passion’ made their first quarter of this year, and you’d think there would be some goodwill. Because they’ve stonewalled us, we’re going to aggressively pursue this, opening up their books if they force us to.”

Regal, which also owns the Edwards and United Artists theaters, declined to discuss the suit. “We do not comment on our business practices with the studios,” said Dick Westerling, senior vice president of marketing for the chain. Newmarket Films, the U.S. distributor, wasn’t named as a party in the suit because Icon owns all the rights to the movie. Although it gets a cut of Icon’s box office take as a distribution fee, Newmarket declined to comment.

A source close to Icon regards the suit as an attempt to assert Icon’s rights in the distribution arena -- a world traditionally governed by relationships between the major studios and theater owners eager for A-list product. “This is a club which doesn’t want new, bigger members,” he said. “Icon and Newmarket went to Regal knowing that upfront. This suit is a warning -- a statement that the two of them aren’t one-off companies, here today, gone tomorrow. If the film performs, they expect fair play. They won’t be taken advantage of.”

Icon is seeking punitive damages in addition to the $40 million-plus it claims it is owed. Leading up to the film’s Feb. 25 opening, Regal booked “The Passion” in at least 420 of its theaters. Hedges said the dispute was specific to Regal rather than an overall criticism of distribution practices related to the film. This is the first time the 14-year-old company has taken a theater chain to court, he said.

Regal’s profits were sizable enough that the company declared another dividend to shareholders. The company’s controlling shareholder, billionaire Philip Anschutz, who assembled his theaters from three bankrupt chains, stands to receive about $368 million.