Three Movies of Tarzana v. Pacific Theatres Inc‪.‬

LEAVY, Circuit Judge The appellant, Three Movies of Tarzana (TMT), is a partnership which owned a six screen movie theatre in Tarzana, California. The appellees are a competing movie exhibitor, Pacific Theatres, Inc. (Pacific), and several movie distributors (the distributors). TMT alleges the appellees violated § 1 of the Sherman Act. 15 U.S.C. § 1 (1987). At issue is the reasonableness of certain ""clearances"" granted to Pacific by the distributors in movie exhibition licenses. Movie exhibitors submit bids to movie distributors for the right, or license, to exhibit particular movies. These bids usually include certain proposed terms: the guaranteed minimum the theatre will pay the distributor regardless of the movie's success, division of profits between the exhibitor and distributor, the time period the movie will show, and any clearances. Clearances preclude distributors from licensing other theaters, either specifically named or encompassed in a named geographic area, from showing a movie while it is being exhibited by the theater whose bid is accepted. Distributors evaluate these terms, and other factors, in determining which theaters they will license to show particular movies.