AMC, Dallas theater clash over rights to screen new movie releases first

Small town theaters and major chains are once again clashing over who gets first dibs on new movie releases.

Tom Stephenson, chief executive of Dallas-based Look Cinemas, has complained to the major studios that the nation’s second-largest movie chain, AMC Entertainment, is using its clout to keep new releases from screening at his new luxury theater.

He and his partners invested $20 million in 2013 to open a luxury 11-screen theater in an affluent suburb of Dallas where patrons can order food and drinks in plush recliners.

In a recent letter to the heads of the six major studios, Stephenson blasted AMC Chief Executive Gerry Lopez over a long-standing practice in the exhibition industry in which theaters seek to “clear” certain markets, ensuring rivals in proximity cannot play releases at the same time.

“AMC is using clearances as a competitive weapon to prevent market entrants from building near AMC theaters,” Stephenson wrote in a letter, a copy of which was obtained by The Times. “The basis of competition between film exhibitors should be the customer experience and not the artificial construct where one theater cannot get a picture because of a clearance.”

Stephenson first raised the issue with studio executives last year when he learned Look Cinemas would not be allowed to screen the third installment of the hugely popular “Hunger Games” franchise when it first debuted. Instead, the movie was showing first less than two miles away at a rival AMC multiplex, which opened a year and half after Look Cinemas debuted in 2013, Stephenson said.

Look Cinemas is among a dozen mostly independent theaters nationwide for which AMC had sought clearances, viewing them as competitive threats, according to an internal memo. Tensions between independent theater operators and large chains have escalated in recent years as the industry has consolidated.

Stephenson said his letter was prompted by comments Lopez recently made at an industry conference in which the former Starbucks executive defended the use of clearances as a necessary evil of doing business.

Ryan Noonan, a spokesman for AMC, said he could not comment on the letter because he had not seen its contents.

But he said the Leawood, Kan., chain was following long-standing industry practices.

“What I can tell you is that we’ve discussed film allocation zones at length in the media, as well as with our studio and distribution friends to ensure there is no confusion,” he said. “It is well understood by all the relevant players. There is no new news here.”

Studio executives were reluctant to comment publicly on the letter. But in a letter Wednesday responding to Stephenson, Warner Bros. general sales manager Jeff Goldstein defended the use of clearances.

“Clearances over substantially competing theaters are legitimate demands because they allow exhibitors to invest more in a facility with a greater chance of recouping and profiting from the that investment by not having the grosses diluted by too many runs in the area,” Goldstein wrote. “The consumer benefits from having nicer theatres from which to choose.”

Twitter: @rverrier