Cinemark Receives Justice Department Query

Cinemark Holdings Inc., the nation's third-largest theater chain, told shareholders Tuesday it received a request for information and documents as part of an investigation by the U.S. Department of Justice's antitrust division, an announcement that now means all three of the nation's biggest movie theater companies are facing government scrutiny.

Cinemark received a civil investigative demand from the Justice Department seeking information on its participation in certain joint ventures and the use of exclusivity agreements known in the industry as "clearances." The company's chief rivals, Regal Entertainment Group and AMC Entertainment Holdings Inc., made similar disclosures on Monday.

"Although we do not believe that we have violated any federal or state antitrust or competition laws, we cannot predict the ultimate scope, duration or outcome of these investigations," Cinemark said in a notice filed with the Securities and Exchange Commission. All three chains disclosed similar requests from the office of the attorney general of Ohio.

The government is scrutinizing the major exhibitors' use of "clearances," which allow circuits to play certain titles exclusively in a given market. The agreements, which have been used in the exhibition industry for decades, have recently become a contentious topic in light of growing theater construction and increased competition.

The disclosures on Monday sent AMC shares falling before stabilizing on Tuesday. AMC shares closed down 12 cents on Tuesday, at $27.87. Regal shares closed down 17 cents, at $20.73. Cinemark announced the investigative demand after the market closed; its shares had settled at $39.85, down 48 cents.

Write to Erich Schwartzel at [e-mail]

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