Movie monopoly? Regal faces lawsuits around the country

In an abrupt change of heart, Regal Stonefield Stadium 14 now lists Star Wars, The Revenant, Hail, Caesar! and Deadpool as screening February 19, even though they're on the bill at Violet Crown as well.
Staff photo In an abrupt change of heart, Regal Stonefield Stadium 14 now lists Star Wars, The Revenant, Hail, Caesar! and Deadpool as screening February 19, even though they’re on the bill at Violet Crown as well. Staff photo

In 2000, Charlottesville had seven movie theaters. For most of 2015, it had one—Regal Stonefield Stadium 14 and IMAX—until the Violet Crown Cinema opened downtown late last year.

“That’s one theater too many for Regal,” says Adam Greenbaum, owner of the Visulite in Staunton and the beloved Vinegar Hill Theatre in Charlottesville, which closed in 2013, along with the six-screen Carmike Cinemas, leaving Regal Stonefield the sole first-run venue in town for two years.

Greenbaum directly lays the closing of the 37-year-old Vinegar Hill Theatre, which opened in 1976 and was Charlottesville’s art house favorite, at the hand of Regal Cinemas. For years the independent movie house staved off competition from the Regal Downtown, which opened in 1996. “When they turned the Downtown Mall theater into an art theater, they turned off the spigot,” says Greenbaum. “We couldn’t get any movies.”

That same complaint is the basis of lawsuits filed against Regal Entertainment Group in Queens, New York; in Houston, Texas; and on January 26, by the Landmark Theatres in Washington, D.C.

A judge in Texas granted a temporary injunction to IPic, a Florida-based small luxury theater chain that opened a theater in Houston’s high-end River Oaks district in November. The court enjoined Regal from “engaging in anticompetitive and unlawful conduct, by directly or indirectly, demanding or requesting exclusive film licenses or the right to exhibit films from any studio to the exclusion of plaintiffs’ Houston theater,” according to the January 21 injunction.

Nor may Regal tell a studio it will refuse to show a film if the studio licenses it to IPic, which sounds eerily familiar. That’s why Star Wars: The Force Awakens, the biggest-grossing box office release in history, was not shown at Charlottesville’s only IMAX theater at the Regal Stonefield.

Violet Crown owner Bill Banowsky says Disney, which produced Star Wars, came to Charlottesville, studied the market, visited the two theaters and concluded that Charlottesville should have two runs for wide-release movies, not just one, and offered Star Wars to both Violet Crown and Regal Stonefield. 

“Regal elected to not play the film,” says Banowsky in an e-mail. “We understand Regal has told the major film distributors that it will not play any film that plays at Violet Crown, putting pressure on film studios to deny films to Violet Crown. Disney did not buckle under this pressure, even though it risked losing money by not playing Star Wars at the Regal Stonefield, a very large theater with an IMAX screen and substantially more seats than Violet Crown. Disney took the long view. And, by the way, Violet Crown did exceedingly well with Star Wars.”

The practice of demanding exclusivity, or “clearance” in movie distribution lingo, is not illegal, says Banowsky. However, clearances are legal only between theaters deemed to be in “substantial competition” with one another, he says. Disney determined that Violet Crown in downtown Charlottesville and Regal Stonefield, located just outside the city limits, are not in “substantial competition” with one another and elected to offer Star Wars and its other wide-release movies to both theaters, he says.

Violet Crown also snagged holiday hits The Revenant, Joy and The Big Short, which did not screen at Regal Stonefield.

Banowsky competes against Regal in six markets: Raleigh, Charlotte and Asheville, North Carolina, with his Carolina Cinemas properties, and in Violet Crown cities Austin, Santa Fe and Charlottesville. “Regal has attempted to ‘clear’ us only in Charlottesville and Santa Fe,” he says.

The original idea of market clearance was to keep theaters from all showing the same movie and to give moviegoers some choice, back in the day when most theaters were one screen, says Greenbaum.

In the case of Star Wars, Regal is “still maintaining Charlottesville is a closed market and it’s not big enough for two theaters to be showing the same movie,” says Greenbaum. “It’s more than clearance. It’s using market clout to muzzle distributors from giving product to theaters.”

In June, CNN reported the Department of Justice was investigating antitrust practices by Regal, the nation’s largest movie chain with 7,334 screens, and AMC, which has 4,872 screens.

“Officially we don’t comment whether or not something is under investigation,” says Department of Justice antitrust spokesperson Mark Abueg.

“We’re not allowed to make any comment to media,” says a manager at Regal Stonefield, who referred a reporter to Regal’s corporate media relations. Richard Grover, Regal’s vice president of marketing and communications, did not return phone calls from C-VILLE, nor has the company responded to any media inquiries about its legal travails in the past year, according to news stories written about it.

Over in Staunton, Greenbaum says business at the Visulite Cinema is good. “We’re fortunate right now,” he says, “not to be in a market with Regal.”

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