Denver Film Society joins antitrust lawsuit against Landmark Theatres

by John Moore | Sep 27, 2017
Sie

The Denver Film Society assumed its three-screen space at 2510 E. Colfax Ave. in 2010 after the original owners were done in by an inability to compete for first-run films

Lawsuit claims Landmark uses its market dominance to eliminate local competition for films

Today the Denver Film Society joined with three independent film exhibitors in filing a lawsuit against Landmark Theatres, claiming that the nation's largest chain of specialty film theaters has denied them access to films they sought to exhibit in violation of federal antitrust law.

Cinema Detroit, West End Cinema and the Avalon Theatre (the latter two of Washington D.C.) are also seeking relief from what it calls Landmark’s "unlawful anti-competitive practices." Specifically, the plaintiffs allege that Landmark uses its market dominance to demand exclusive rights to screen specialty films, resulting in no local competition for those films despite consumer demand. The lawsuit was filed in the U.S. District Court for Washington D.C.

In Denver, Landmark operates the Esquire, Mayan and Chez Artiste theatres, as well as the Landmark Theatres in Greenwood Village.

Sie quote“We did not reach this decision lightly,” said Andrew Rodgers, Executive Director of the Denver Film Society. “After years of trying to work within the system and talking with partners and peers about how we can overcome the unfair competition we face from Landmark, we have come to the painful conclusion that this is a nationwide problem that affects the entire independent film community. The deck is stacked against community theaters like ours, and the only way we can solve the problem we all face and serve our audiences properly is to seek a remedy through the courts.”

The following excerpted explanation was provided by the Denver Film Society. This article will be updated when a statement from Landmark Theatres becomes available:

To exhibit a film, a movie theater must obtain a license from the film’s distributor, which is responsible for marketing the film and acting as a middleman between the production studio and the theater.

The suit claims that Landmark’s business practice of “clearing” films – an agreement limiting a film distributor’s ability to provide other theaters with a license to screen a desired film to the public – is harming marketplace competition by excluding independent movie theaters from screening the specialty films necessary to their competitive success. In addition, the process is reducing output, restricting price competition, and denying moviegoers their choice of theaters to see select films.

Landmark, a private corporation that forms part of a group of companies owned by venture capitalist Mark Cuban, is the self-described dominant theater chain, with a nationwide circuit dedicated to exhibiting specialty films in the United States. The company operates 51 theaters with 242 screens in 22 major metropolitan areas, including theaters in each of the plaintiff’s local markets.

Landmark controls most theaters and screens showing specialty films in the plaintiffs’ locations – and uses its national “circuit power" to prohibit independent theaters from showing those films. The result is that these independent theaters, many of them run as non-profits, are often prohibited from showing the high-profile specialty films its audiences want to watch, injuring the theaters’ economic prospects.

In Washington D.C., Landmark repeatedly blocked West End Cinema from showing films at the same time as its own theaters, forcing the theater to shut down in 2015. One month after West End Cinema closed, Landmark acquired the building lease and opened its own theater.

“After more than four years of unrelenting anti-competitive squeezing by Landmark, I was forced to close West End Cinema on March 29, 2015 – which was followed less than one month later by an announcement that Landmark was leasing the space and ‘reopening’ it as the Landmark West End Cinema,” said Josh Levin, a co-founder of West End Cinema. “So they killed me and my business, then moved into my house.”

The other three theaters represented in the suit allege that Landmark’s anti-competitive practices and the continued use of its national "circuit power" prevent them from obtaining desirable specialty films.

In Washington D.C., the Avalon Theatre has faced significant competitive challenges with Landmark since the Avalon opened as a nonprofit in 2003.

In Denver, since it opened the Sie FilmCenter in 2010, the nonprofit Denver Film Society has been unable to book a single film that Landmark was also showing locally at one of its theaters.

(Editor’s insert: In 2010, the Denver Film Society assumed the three-screen space created and formerly occupied by the Neighborhood Flix Cinema and Café in the former Bonfils Theatre retail center. The operation was done in, Neighborhood Flix owners said, by an inability to compete for first-run films. “Landmark and Regal Cinemas just would not let us have a seat at the table,” said Michele Dorant, one of the original theatre’s three owners. A Denver Post report today points out that in August 2016, Landmark sued national exhibitor Regal Entertainment for similar distribution tactics. In this case, however, Landmark is the one accused of monopolistic practices. In Detroit, the local Landmark and Cinema Detroit are the only two theaters that show specialty films. Although the theaters are more than 11 miles apart, Landmark still prevents Cinema Detroit from showing almost every specialty film.

“I wish that this legal action was avoidable,” said Paula Guthat, co-founder of Cinema Detroit. “Unfortunately, Landmark actively engages in unfair business practices that limit our ability to screen certain types of films in the metro Detroit market. It’s unfair to us as a business and to our patrons who look for Cinema Detroit to offer the best in independent films and documentaries.

Last year, Landmark filed a similar lawsuit against Regal Entertainment Group, another national theater chain, accusing Regal of similar anti-competitive conduct aimed at Landmark with respect to commercial films.

“Landmark went to court to fight against clearances for the films it wanted to show,” said Bill Oberdorfer, Executive Director of the Avalon Theatre. “We are doing the exact same thing and simply asking for the same opportunities with respect to specialty films.”

The suit seeks monetary damages and an injunction prohibiting Landmark from seeking clearances against plaintiffs’ theaters. The plaintiffs are represented by Hausfeld, a global litigation firm with expertise in antitrust law.

 

Additional statement from the Denver Film Society:

Also today, the DFS emailed the following statement from Board President Robert Clasen:

Bob-Clasen-HeadshotSince opening the Sie FilmCenter seven years ago, we have been blocked from booking and showing countless films that our audiences have requested due to Landmark’s practice of enforcing “clearances.” These clearances are restrictions that Landmark imposes on the film distributors it works with, preventing other theaters in an area from showing a film simultaneously to them. In fact, NOT ONCE has DFS been allowed to show a film simultaneously to Landmark at the Sie FilmCenter – as they have enacted a complete and total blockade on our ability to show films that you and many others in our Denver film community want to see.

They can demand this from distributors because they have significant clout as a national chain and – we believe – abuse that clout to get what they want. Landmark currently operates 51 theaters with 242 screens in 22 major metropolitan areas, making them the largest of the chains that show independent movies in communities around the country. Most of their competition comes from small mom-and-pop theaters or nonprofits like the Sie FilmCenter.

 Quite understandably, many small businesses and non-profits are nervous to put up a fight against the 800-pound gorilla in their industry. But after years of trying to work within the system and talking with partners and peers about how we can overcome the unfair competition we face from Landmark, we have come to the conclusion that this is a nationwide problem that affects the entire independent film community and must be addressed. And because the deck is stacked against community theaters like ours, the only way we can serve our audiences properly and solve this problem that plagues our industry is to seek a remedy through the courts.

 For us, this is a principled stand. Through this action, we hope to help effect a change in our industry that will benefit filmmakers and film-lovers alike.

 DFS, along with the other plaintiffs, in this case, is being represented by a well-known law firm – Hausfeld – with deep experience in antitrust litigation, which is taking this case on a contingency fee basis. Consequently, it is important for you to know that DFS will not be using ANY of the contributions we receive from our members, donors, foundations (including the SCFD) or sponsors, to pay for legal fees in this litigation.

 We have considered this action for several years and it was a difficult decision to finally make. That said, we are confident that the filing of this lawsuit and the potential positive outcome will be a critical step toward ensuring a long and healthy future for the Denver Film Society and similar independent film organizations across the country.

Note: Robert Clasen is a retired media and entertainment executive whose career has included President and CEO of Comcast Cable and later Comcast International, CEO of Starz Entertainment, Division President at McCaw Cellular, and Executive VP of US Operations for Rogers Communications. Currently he serves as Chairman of the Colorado Creative Industries Council.

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John Moore
John Moore
Award-winning arts journalist John Moore has recently taken a groundbreaking new position as the DCPA’s Senior Arts Journalist. With The Denver Post, he was named one of the 12 most influential theater critics in the US by American Theatre Magazine. He is the founder of the Denver Actors Fund, a nonprofit that raises money for local artists in medical need. John is a native of Arvada and attended Regis Jesuit High School and the University of Colorado at Boulder. Follow him on Twitter @moorejohn.

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