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Movies

Justice Dept. launches movie studio antitrust probe

Web posted on: Tuesday, February 09, 1999 3:10:38 PM EST

From Justice Correspondent Pierre Thomas

WASHINGTON (CNN) -- The Justice Department has launched a preliminary investigation into allegations that major movie studios may be exerting undue control over the way films are distributed, sources familiar with the probe say.

"We are looking into certain, possibly anti-competitive practices in the distribution of motion pictures," said Justice Department spokeswoman Jennifer Rose, declining to comment further.

But CNN has learned the investigation stems from a consent decree movie studios agreed to in the late 1940s which bans them from two anti-competitive practices: "block booking" and "clearances."

Block booking is an illegal tactic in which studios force theaters to make room for weak movies in order to obtain the rights to show potential blockbusters. Clearances give specific theaters exclusive rights to show a film in a specific region.

Sources tell CNN that the Justice Department last week sent out investigative demands, the civil equivalent of subpoenas, to a number of companies in the movie industry, requesting documents about distribution practices.

Those notified included Time Warner Inc.'s Warner Bros., a sister company to CNN.com; Viacom Inc.'s Paramount Pictures; Walt Disney; Metro-Goldwyn-Mayer Inc.; and two of the country's largest theater chains, Loews Cineplex and Regal Cinemas.

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