Landmark Calls Regal Cinemas a Monopoly

(CN) - Cinema giant Regal Entertainment Group used its power as a near-monopoly to eliminate fair competitive access to commercial films, Landmark Theatres claims in a federal complaint.

Los Angeles-based Silver Cinemas Acquisition Co., which does business as Landmark Theatres, sued the Knoxville, Tenn.-based Regal Entertainment Group and seven subsidiaries on Jan. 26 in Washington.

The distribution level of the U.S. film industry is "highly concentrated," with about 90 percent of the national box office gross - which topped $10 billion in 2014 - being generated by films distributed by just seven "major" companies - 20th Century Fox, Disney, Warner Bros., Sony, Universal, Paramount, and Lionsgate - according to the complaint.

"In 2014, films distributed by the major film distributors accounted for approximately 91 percent of Regal's circuit-wide box office grosses," Landmark claims.

Meanwhile, Regal "controls 91 percent of the market for commercial film licensing and exhibition in that market" in northwest D.C.'s densely populated core, the complaint says.

Yet Landmark says Regal's 14-screen, 3,350-seat Gallery Place Stadium theater in D.C.'s Chinatown allegedly has "unpleasant crowds (including teens and children) that can destroy the movie-going experience, a virtually constant police presence," exorbitant prices, and "dirty bathrooms." (Parentheses in original.)

After the Regal Gallery Place opened in 2004, Landmark opened its six-screen, 344-seat Atlantic Plumbing Cinema in D.C.'s "revitalized, up-and-coming" Shaw/Howard University neighborhood in October 2015, to show primarily commercial films, according to the complaint.

Those included "The Hunger Games: Mockingjay, Part 2"; the most recent James Bond movie, "Spectre"; and "Star Wars: The Force Awakens," which each grossed between $70 million and $248 million nationally on their respective opening weekends, the complaint states.

But the major distributors allegedly said Gallery Place was "asserting a blanket clearance over - i.e., was refusing to play any commercial films day and date with" - Landmark's theater.

"Regal's message to the distributors was clear: If you license a commercial film to Landmark's Atlantic Plumbing theater, Regal can and will use its monopoly power in the District Core, its dominance in the greater D.C. [designated market area] DMA, and its national circuit power, to retaliate against you, both by denying your film its full grossing potential in the District Core by not playing it at the Gallery Place, and by reserving the right to disadvantage your film's prospects at any of Regal's 575 theaters across the country," the complaint states.

Landmark says it is stuck with less lucrative films like "Miss You Already," starring Drew Barrymore, which grossed only $552,506 nationally on its opening weekend.

Regal "has reduced output, increased prices, and reduced the overall quality of commercial film exhibition offered to the public, has severely damaged competition in licensing and exhibition of films, has damaged Landmark's business and property, and is likely to continue unless enjoined by the court," the complaint states.

Landmark seeks compensatory, treble, and punitive damages; costs and attorney's fees; injunctive relief; and a trial by jury for violations of federal and district law.

Regal Entertainments Holdings Inc.; Regal Entertainment Holdings II LLC; Regal Cinemas Corp.; Regal Cinemas Holdings Inc.; Regal Cinemas Inc.; Regal Cinemas II LLC; and Regal Gallery Place LLC are also named as defendants.

The plaintiffs are represented by Barry Reingold with Perkins Coie in Washington, D.C.

The defendants did not immediately respond to an emailed request for comment from Courthouse News.

Founded in 1974, Landmark today has 55 theaters, with 267 screens in 25 markets, while Regal is the largest movie theater circuit in the country, with about 7,631 screens in 575 theaters, including 24 cinemas in D.C.'s designated market area, according to the complaint.

Regal reported third-quarter 2015 revenues of $725 million, having reportedly reaped $2.99 billion in 2014, and will announce 2015 full-year revenues next week.

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