Fox Eliminates Practice of Exhibitors' 'Clearances'

As the U.S. Department of Justice continues to investigate the legality of clearance booking by major cinema chains and studios, 20th Century Fox announced yesterday that it would no longer grant requests from large cinema circuits for exclusive screening rights to certain movies, ie. clearances.

Fox notified theater owners that they would no longer entertain requests for 'clearances', which allows theaters to show a movie exclusively in markets where a competitor is located nearby.  Fox told exhibitors that the policy change would go into effect with the release of  'X-Men:Apocalypse' to be released on May 27th.

CMG has previously reported on this issue and has been following the actions of the Justice Department's Antitrust Division investigation (which is on-going) into the practice of clearances. On Fox's move to eliminate the practice the Justice Department declined CMG's request for comment.

The Clearance Culprits

In addition to the Justice Department's investigation, several small exhibitors have sued larger chains over the practice saying they are being denied certain movies which greatly impairs their operations' profitability. iPIC Cinemas. a small, upscale cinema circuit, is suing AMC Entertainment, and Regal Cinemas (the two largest U.S. theater chains) over the practice. "The concepts of clearances are antiquated and don't apply to modern day society" Hamid Hashemi, CEO of iPic told CMG.  AMC and Regal have, in the past, opted not to screen movies in markets where their clearance requests were denied, putting pressure on the studios to honor their requests.

In its new policy, Fox runs the risk that the biggest theater chains will decide not to screen the studio's movies in some markets. But, Chris Aronson, Fox's President of domestic distribution told CMG, "That's their prerogative. It's hard to have revenue if you don't have product. We question whether they would really forego playing the big titles."

Fox's new policy could lead to a moment of reckoning on the issue. If other studios follow suit it will spell the end to the long held booking practice of allowing exclusive clearance for screening films.

CMG agrees with Fox, the practice of clearances is anti-competitive and theaters should be viewed as equals in screening films. Let moviegoers decide which theater they want to patronize and may the best theaters win.