INDEPENDENT cinema owners will today urge the corporate regulator to reject a proposal for the nation's three dominant cinema exhibitors to seize control of advertising group Val Morgan.
Kerry Packer's Hoyts cinema exhibition business - together with Greater Union and Village Roadshow - plans to assume ownership of the troubled cinema advertising business, which is teetering on the brink of financial extinction.
The three players have spent the past two days in talks with the Australian Competition and Consumer Commission, on a series of undertakings designed to placate regulatory concerns.
They propose to buy the business from its troubled parent, Television & Media Services, in return for the release of existing and future liabilities under cinema advertising agreements.
But they face fierce opposition from the independents, who are fearful that allowing their competitors to operate a monopoly in the cinema market will erode their bargaining clout.
"If the undertakings are passed as they stand, the ACCC will be doing that under strong protest of many independent cinema owners," said Neil Pentecost, head of the Independent Cinema Owners of Australia. "It would be handing control of our future to our competitors."
The independents own about a third of the 1800 cinema screens in the country, and the cinema advertising, worth about $70 million, accounts for roughly 20 per cent of their revenue.
Mr Pentecost, who is also chief executive of the biggest independent player, Reading, said the restructure could cost the independents millions of dollars in advertising revenue.
The independents fear the bulk of advertising would be directed towards the big cinema chains.
Under existing contracts, most smaller cinema owners get a guaranteed flat fee per screen or a percentage of revenue generated by Val Morgan.
But Mr Pentecost said the new arrangement would give small exhibitors a 50 per cent cut of the revenue, less than they receive at present.
An ACCC spokeswoman said the commission had serious concerns about the revised undertakings it received this week.
-THE AGE
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