Antitrust Unlikely to Restrict Today’s ‘Runs,’ ‘Clearances’ in Film Distribution

Exclusivity will typically enhance the value of a product for a retailer. Being the only outlet for some period of time from which a customer can purchase the product in a given area should enable the seller to charge a premium price. Because the retailer could charge a premium price under this arrangement, the distributor in turn might be able to charge the retailer a premium price for that period and scope of exclusivity. Indeed, in the 1930s and '40s, that was the logic that underlay the distribution of motion pictures. Distributors would license exhibitors on higher terms for a limited, first-run engagement, granting the theatre owner a "clearance" over competing theatres in a broad geographic area, for a time during and even following the first run engagement.

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