Arguing that the Paramount-Warner Bros. merger will harm theaters and cable providers, he brought an antitrust suit in July and managed to stall the deal until next spring. But his winning streak couldn’t last forever. Last week, Cinemark joined AMC and Regal in backing the merger.
That defection prompted the exhibitors trade group Cinema United — once a staunch Bonta ally — to go wobbly and push for a settlement. That’s typically a vital part of the narrative of illegality. … If you have significant customers who say, ‘We like it,’ that hurts the plaintiffs’ case.” Paramount has tried various ploys to put political pressure on Bonta — op-eds, letters from allies, threats to leave California, politicians’ statements — which Bonta has largely brushed off. He canceled an Aug. 24 meeting with Paramount after details leaked and accused the company of “playing games.” But the cinema chains’ support for the merger is different, because it goes to the viability of Bonta’s case at trial.
The suit, filed July 13, alleges that Paramount will have excessive power in three markets, two of which involve theater chains. By consolidating two of the five largest distributors, Bonta and 11 other state attorneys general argue, the merger will put theaters in a weaker position in negotiations over windows and revenue splits. In its defense, Paramount could call the CEOs of the three largest circuits to the witness stand.
Adam Aron, chief executive of AMC, has been saying since April that he thinks the deal will be good for theaters because it will strengthen the combined studio, leading to more movies. The National Association of Theatre Owners changed its name last year to Cinema United, which is more aspirational than descriptive, as Aron — a board member — has a tendency to go his own way. With Aron behind the merger, Regal and Cinemark had little choice but to follow suit.
On an investor call in May, Cinemark CEO Sean Gamble said that Paramount’s David Ellison was “saying all the right things.” “We just like to see those statements backed by firm commitments,” he said. Ellison has now satisfied that request, pledging in writing to release 30 films a year for three years and to give each a 45-day window. Paramount has said it will offer the same written guarantee to other exhibitors.
That doesn’t mean that everyone’s issues have been fully resolved. In its letter calling for a settlement, Cinema United asked for “enforceable safeguards” on access to films, and reiterated concerns about marketing budgets and rental terms. And it doesn’t mean that Bonta won’t be able to prove the deal is anticompetitive.
Extract — continue reading at the source.
