Distributors and exhibitors prepare to grapple with collective bargaining

04 October, 2017 by Don Groves

ICA CEO Adrianne Pecotic. 

Distributors and exhibitors gathering on the Gold Coast this weekend for the annual Australian International Movie Convention no doubt will be addressing a contentious issue: collective bargaining.

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For the first time, independent exhibitors will be allowed to share information and collectively negotiate terms with distributors from early next year.

That follows a draft determination issued last week by the ACCC which proposes to grant a five-year exemption to cartel laws to Independent Cinemas Australia (ICA) and its 84 members.

The ICA, which represents about 30 per cent of Australia’s exhibitors, had asked for a 10-year exemption.

The ruling has dismayed distributors, which have argued the long-standing Film Exhibition and Distribution Code and the Code Conciliator are highly effective in settling disputes.

ACCC Commissioner Roger Featherston said ICA’s proposal is likely to “benefit the public as it should reduce negotiation costs for independent cinemas and distributors who participate.”

“Any cost reductions and improved terms from collective bargaining may help the viability of small cinemas and allow them to reinvest into their cinemas, creating a better experience for cinemagoers.”

The ACCC stressed participation in the collective bargaining proposed by ICA is voluntary for all parties, and the proposed conduct does not include cinemas engaging in any collective boycott of films supplied by distributors.

However distributors are unclear about just how the collective bargaining process will work and they do not see any cost savings.

They point out that the distributors’ share of the BO is already very low by world standards, typically around 43 per cent for studios’ hits and as little as 35 per cent for some independent releases.

Each year only about two or three complaints are made to the Code committee, which represents the major distributors and chains and indie distributors and exhibitors.

In its submission to the ACCC ICA claimed there is the likelihood of a major market failure because digital disruption is exacerbating an imbalance in market power that disadvantages independent exhibitors.

The ICA also referred to anticipated likely changes to the exclusive theatrical release window.

Universal Pictures International Australia’s submission asserted the ICA did not provide any evidence to support those statements and there is no credible evidence that market changes will lead to the type of imbalance that concerns the ICA in the foreseeable future.

“Collective bargaining by such a large and diverse membership base of exhibitors raises issues from a competition perspective,” UPI said.

“Collective bargaining typically results in all participants receiving the same outcomes – however, with such diversity in exhibitors (as well as distributors), the services delivered by distributors vary greatly.  A “one size fits all” outcome is not appropriate.”

The Australian Independent Distributors Association (AIDA) sought unsuccessfully to be exempted from the sharing of information and collective negotiation, arguing that would have a severely negative impact on the already minimal bargaining position held by AIDA members.

AIDA warned that “we could quickly see the number of independent Australian, foreign, documentary, arthouse or “diverse” films diminish in Australia because independent distributors will simply not be able to afford to continue to acquire Australian rights to such content, and then distribute it to exhibitors on compromised terms.”

Madman Entertainment’s Paul Wiegard told IF that distributors’ margins are already very tight. “It’s not a matter of ‘us versus them’,” he said.  “We are all working together to ensure we have a healthy marketplace.”

ICA CEO Adrianne Pecotic told IF, “ICA welcomes the draft determination from the ACCC and we are considering the detail carefully. We do not consider it appropriate for ICA or our members to comment further during the ACCC authorisation process which is not expected to conclude until mid-December. We look forward to continuing to work professionally and constructively with all stakeholders and our members.”

The ACCC is seeking submissions on the draft determination until October 20.  It expects to release its final determination in December.

 

 

 

 

 

 

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