VietNamNet Bridge – They accuse Megastar of using its position in the market to raise film hiring prices and impose film distributing conditions.

Up to 90 percent of commercial movies introduced at cinemas are imported, mainly from the US.

Ticket revenues are divided between cinemas and film importers based on a fixed ratio. The pay for film importers is called the movie hiring price. For example, if ticket revenue for a foreign film screened at Cinema A is 1 billion dong and the revenue sharing ratio is 50:50, Cinema A will take 500 million dong and the film importer will receive 500 million dong. Cinema A has the right to fix the ticket prices.

Major film importers in Vietnam include Megastar Media Co., Ltd or Megastar, Thien Ngan Film JS Company (Galaxy), Binh Hanh Dan Co, Ltd. (BHD), Lotte Cinema Vietnam Co, Ltd. (Lotte). 

Each foreign film firm signs a distribution contract with only one distributor in a country. Megastar is a joint-venture between Phuong Nam Culture Company (10 percent) and Envoy Media Limited of British Virgin Island (BVI) (90 percent). This firm has modern technology, abundant capital and big cinemas, so it has won contracts with four of five big film studios in Hollywood.

According to some cinemas, holding a large number of imported movies, Megastar has raised film hiring prices as of June 2009. It also imposed a new policy in revenue-sharing ratio, the “minimum film leasing price.” If Cinema A sells tickets at a price of less than 50,000 dong, Megastar earns at least 25,000 dong/ticket. If ticket prices are over 50,000 dong, Megastar takes half the revenue.

At that time, ticket prices at Hanoi’s Dan Chu cinema were 20,000 and at HCM City’s Cinebox tickets were 25,000 dong. If cinemas didn’t accept Megastar’s policy, they would have no films. If they didn’t raise ticket prices, they would suffer heavy losses. If they raised prices, they might lose customers.

Some cinemas like Cinebox, Tan Son Nhat, Galaxy, Thang Tam (August) plus more have suffered losses and/or a 25-50 percent reduction in revenue since the second quarter of 2009.

Tran Canh Tue, director of Dong Nai Film Distribution Centre, had to close one of two cinemas, and the remaining venue just limps along.

“We can’t afford to upgrade our cinemas to Hollywood standards at Megastar’s request. We can’t earn several million dong of profit to pay them. So we don’t have blockbusters imported by this firm. Megastar also asked domestic film producers not to offer their films to small distributors like us if their films are already distributed by Megastar. As a result, we don’t have films to screen,” Tue complained.

Pressure on big cinemas like the National Movies Centre or Galaxy is not very tense, but a Galaxy representative admitted that they had to raise ticket prices for films distributed by Megastar to avoid losses.

Dien, chief of the Service Department of the National Movies Centre, agreed that there are some problems with Megastar that the centre can’t resolve now. At present, the centre doesn’t screen Megastar’s films.

“Since Megastar changed its policy, we have faced a lot of problems. They also forced us to increase the weekly number of shows for their films from 40 to 70, so there was no room for films of other partners. We tried to discuss this many times, but they refused to accept it. Finally, we had end our cooperation, which has affected our audience numbers. Yet, we are a big cinema, so we are not tied to Megastar,” Dien explained.

Cinemas have continuously called for Megastar to negotiate, but the firm remains intractable.

On March 1 six companies, named Saigon Cinema JS Company (Cinebox Hoa Binh), 212 Movie JS company (Cinebox Ly Chinh Thang), Saigon Movies Media JS Company (Dong Da, Thang Long, Toan Thang and Vinh Quang cinemas), Thien Ngan Film JS Company (Galaxy cinemas), Hanoi Movie Co, Ltd. (Thang Tam cinema) and Dong Nai Distribution Centre (Thanh Binh and Song Pho cinemas) sent complaints to managing bodies.

The Central Popularisation and Training Committee, the Ministry of Culture, Sports and Tourism and the Movie Agency met with representatives of the six above firms and Megastar in early April 2010, with no discernable changes in Megastar policy.

Six firms submitted a joint complaint to the Ministry of Industry and Trade’s Competition Control Agency. On May 12, the agency decided to initiate an investigation.

A lawyer who represents the six firms in the lawsuit against Megastar claimed that this firm has become a giant controlling input and output. It forces others to accept its policies unconditionally, policies that then make Megastar even more powerful. Other film distributors must accept Megastar’s policies, otherwise they will not have access to blockbusters and audiences will flock to Megastar’s cinemas. Therefore, Megastar benefits either way.

The representative added that Megastar also forced cinemas to give their biggest projection rooms and best screening times to its movies, along with other unfair conditions. For example, to show “Transformers”, Galaxy had to also hire the cartoon “Ice Age” from Megastar.

He expressed optimism about the lawsuit. “Vietnam’s Competition Law is complete. We informed Megastar about a possible lawsuit, but they ignored us and we had to raise our voice. We strongly believe in the sense of justice in the law.”

VNExpress newswire called Megastar to ask about the case, but Megastar’s CEO Brian Hall is on an overseas business trip.

Source: VNE