Luxury movie theater chain sues 2 rivals
IPic says AMC and Regal are trying to keep it from showing recently released films
Luxury movie theater company iPic has filed suit against two large chains it claims are trying to squeeze smaller players out of business.
Luxury movie theater company iPic Entertainment has filed suit against two large chains it claims are trying to squeeze smaller players out of business.
The iPic lawsuit, filed Tuesday in Harris County state District Court, alleges that AMC Entertainment and Regal Entertainment are using their market clout to prevent the licensing of recently released films to smaller theaters, blocking their ability to run movies at the same time as larger ones and leaving them unable to compete. The lawsuit claims AMC and Regal have threatened boycotts of specific movie studios — refusing to play their films to their much larger audiences — if smaller theaters are given licensing rights to recent releases.
The iPic chain noted in announcing its legal action that the U.S. Justice Department’s antitrust division earlier this year asked three major theater companies for documents for its own investigation of boycott practices.
An AMC representative responded in an email that the company isn’t doing anything out of the ordinary from longestablished industry practices.
Florida-based iPic Entertainment opened an eight-screen, 578-seat Houston theater earlier this month at the River Oaks District luxury shopping and residential development on Westheimer. Another theater is
planned in the Dallas area.
When distributing their movies in a given area, movie studios look at geographic zones around theaters to maximize ticket sales. What was once common in the industry were “clearances,” or provisions that prevent one theater from playing the same movie at the same time as another for competitive reasons.
Hamid Hashemi, iPic’s president and CEO, said he was not aware of any such agreements when the company was looking at the Houston area.
However, the legal filing states, Regal in July 2014 called “every major studio,” telling them they would refuse to play films that also were licensed to iPic. Regal runs the Edwards Greenway Grand Palace 24 theater about 1.4 miles away from River Oaks District.
Representatives with Regal did not return requests from the Chronicle for comment.
The lawsuit further claims AMC sent a July 2014 email to all major studios threatening a boycott of films licensed to the Dallas-area iPic theater, which was then under development and for which a lease had not yet been signed.
“Allocated film zones are a longstanding, well-established industry practice,” AMC spokesman Ryan Noonan said. “They have demonstrated benefit to all stakeholders — moviegoers, studios and exhibitors.”
IPic contends the boycott threats have major impacts because AMC, Regal and Cinemark — the latter of which is not named in this lawsuit — together control about 60 percent of the screens in the Houston area and 69 percent of the revenue. Nationally, they control 69 percent of movie ticket revenue.
IPic also claims the larger companies have engaged in similar behaviors in other markets.
“This anticompetitive scheme threatens to close down two Texas iPic theaters, inflict irreparable harm on iPic, and eliminate the public’s choice of movie-viewing experience,” the lawsuit states. “If successful, defendants will reduce the quality of this experience in our county and state.”
The iPic lawsuit cites concerns that it may face a fate similar to Viva Cinema.
Viva opened at Sharpstown Mall in May 2013, showing Spanish-dubbed movies a few to several weeks after their release, and some independent films. It closed the following November. Owners cited unfair competition, telling the Chronicle that larger theater chains were blocking smaller ones. Hashemi said Viva has also filed suit against AMC.
The iPic lawsuit claims AMC had Viva Cinema on a list of “predatory competitors” targeted for closure and that through boycott threats, Viva was unable to get any newly released films.
AMC officials at the time denied ever prohibiting movie studios from playing films at Viva Cinema.