Justice Officials Confirm Film Distribution Probe

Federal antitrust officials confirmed they have started looking into the methods Hollywood uses in distributing movies to theater chains.

Justice Department spokeswoman Jennifer Rose declined to elaborate, except to say that the agency is “looking into certain possibly anti-competitive practices” in the business. Sources said the probe appears to be in its early stages.

The confirmation follows a report in Friday’s Daily Variety that the major film studios all received 10-page letters this week seeking information about how they have been doing business with major film exhibitors since January 1996.

Among the practices being looked at, Variety said, is how studios often give film exhibitors exclusive rights to show a movie in specific geographical areas.

Hollywood executives were surprised by the letters, which were received on Thursday, and few were willing to talk about the probe.

“I think we’re all taken aback by it. We were all very surprised, and we’d never heard about it,” said Milton Moritz, president and chief executive of the National Assn. of Theater Owners of California/Nevada.

Several senior executives said the letter does not make clear the exact direction of the probe and seeks information about a wide range of subjects.

Federal antitrust officials in the past have periodically examined how Hollywood books movies into theaters.

In 1951, major studios signed an antitrust consent decree in which they promised not to use their popular films as leverage to get theaters to show less desirable movies. The practice, called “block booking,” was common in the earlier days of Hollywood as a way for studios to boost the box-office receipts for unpopular films.

In 1988, a federal judge ordered 20th Century Fox to pay $500,000 for block-booking several films from 1985 to 1987. Government officials had charged that the company required exhibitors to book the film “Space Camp” to get the hit film “Aliens” and to book “Prizzi’s Honor” if they wanted the popular film “Cocoon.”