The owners of the Malverne Cinema say a planned expansion by a nearby theater could put them out of business, and last week they took their concerns to the state attorney general’s office.
Anne and Henry Stampfel, longtime owners of the five-screen Malverne movie house known for screening independent and foreign films, have said Regal Entertainment Group’s plan to replace its six-screen Lynbrook theater with a 13-screen multiplex will deliver a huge blow to their operation because of industry exclusivity agreements known as “film clearances.”
The agreements allow theater chains to negotiate with studios for the rights to screen a new movie within a designated geographic zone, preventing others in a market from showing the same film at the same time.
The Stampfels, like some other small movie exhibitors, say the practice is anticompetitive.
Regal did not respond to calls and emails seeking comment.
The Stampfels spoke with officials in the antitrust bureau at the attorney general’s office in Manhattan last week as part of an ongoing inquiry by the office into the practices of large movie exhibitors in the state. The attorney general’s office declined to comment for this story.
“They’ve already spoken to other theater owners at length,” said Anne Stampfel, who, along with her husband, previously objected to the Regal project at a public hearing held by the Nassau County Industrial Development Agency earlier this year. “They’re taking this very seriously.”
While major theaters like Regal generally play substantially different movies than the Malverne, the Stampfels say having 13 screens to fill instead of six will force Regal to seek exclusive rights over some of the more popular independent films the Stampfels screen.
Using ticket sales figures from the last 12 months, Anne Stampfel calculated that if Regal were to take clearances on her business’ most profitable films — movies like “Irrational Man,” “The Theory of Everything” and “Birdman” — the Malverne could stand to lose as much as 40 percent of its box office revenue.
“If Lynbrook decides they’re going to play a film, we won’t get it,” says Henry Stampfel, who with his wife also owns a one-screen theater in Bellmore and operates the one-screen North Shore Towers Cinema in Floral Park.
In recent months, film clearances and the business practices of the nation’s largest movie exhibitors have come under scrutiny.
Justice Department inquiry
In late May the U.S. Department of Justice’s antitrust division contacted the nation’s three largest theater operators — Regal, AMC Entertainment Holdings Inc., and Cinemark Holdings Inc. — demanding documents and answers to questions concerning potentially anticompetitive conduct, “including film clearances and participation in certain joint ventures,” according to securities filings from the chains.
Like Regal, AMC and Cinemark officials did not respond to requests for comment.
At least seven district and state attorneys general, including those in Ohio, Texas, Washington, Florida, New York, Kansas and the District of Columbia, have sent similar demands to theater chains.
“I know there are many theaters who cannot access product because of clearance issues,” said Russ Collins, founding director of the Art House Convergence, an industry group that represents roughly 300 independent and not-for-profit movie exhibitors across the United States and Canada.
“It’s the higher-profile prestige pictures that are the meat and potatoes of the art house that can be taken away from the art house by commercial multiplex theaters,” he said.
Other theater operators, like Hamid Hashemi, president and chief executive of iPic Entertainment, a Boca Raton, Florida-based high-end movie chain, have taken legal action against the big chains in recent weeks.
“The only reason they do it is because of their dominant position in the industry,” said Hashemi, whose company filed suit against Regal and AMC last month in Texas state court.
The suit alleges that the two chains conspired in an “anticompetitive boycott” to keep two of his company’s newest theaters in Texas — one recently opened and another still in development — from accessing first-run films by warning studios that if the iPic locations were given rights to play certain new releases, the two giants would refuse to play them.
“As a result of that, some of the studios basically give in to their terms,” said Hashemi, who expects to go to court in January.
The Lynbrook theater expansion, a $32 million project that involves tearing down the nearly 100-year-old theater and replacing it with an 80,000-square-foot multiplex, is a major part of the village’s effort to create a downtown arts and culture district. Regal’s plan was approved by Lynbrook officials in May. In September the Nassau County Industrial Development Agency granted reductions on sales and mortgage recording taxes of up to $851,000 for the project, and granted a 20-year break on property taxes.
‘Apples and oranges’
While supportive of the concerns of small businesses, Lynbrook Mayor William Hendrick maintains that comparing the two theaters’ customer bases is “like comparing apples and oranges.”
“The area deserves a big movie house, and I don’t believe it will compete” with the Malverne, Hendrick said. “I might be wrong, but I think we’ll take more business from Rockville Centre than we ever will from Malverne.”
The Stampfels say they are in support of Lynbrook’s revitalization efforts, and even a renovation and smaller expansion of its theater, but the increase to 13 screens is the move they say will hurt them down the line.
“While they’re closed [for construction] we’ll probably get some nice choices of films, but once they open, the fight will begin with my booking and their booking,” said Anne Stampfel, adding that once the “damage begins,” legal options will be on the table.
“Eventually, it will become apparent that they are hurting us,” she said.