- Alisdair SmithCompetition Commission
Stop the enforced sale of three Picturehouse cinemas
In late 2012 Cineworld Group plc bought City Screen Limited, who run Picturehouse cinemas. The Office Of Fair Trading referred the purchase to the Competition Commission. They believe the merger will lead to higher ticket prices in Aberdeen, Bury St. Edmunds and Cambridge. The Commission have reached a provisional decision that Cineworld should sell one of its cinemas in each area. We believe that the Commission are wrong: prices will not increase because of the reduction in competition, because Cineworld and Picturehouse appeal to different cinema audiences. We think audiences will be worse off and that the range of films shown in these areas will reduce if a decision is made to sell the Picturehouses.
The OFT and the Competition Commission refused to accept Cineworld’s argument that Cineworld and Picturehouse are not in direct competition. However, Cineworld’s stated reason for buying the Picturehouse brand was to appeal to a different audience and to invest in and expand the Picturehouse format into new areas. The OFT ran a survey of Picturehouse customers which showed that many would be likely to switch to Cineworld if prices went up by 5%. However, this is an increase of a maximum of 50p on the highest price tickets. The Commission think this would make the Cineworld and Picturehouse cinemas raise prices, as the single company would gain the extra income from the switch, and did not consider that anything other than price would make customers switch, or indeed remain loyal. Surveys of cinema ticket pricing in other areas suggests that price isn’t driven by the number of different competitors but instead how affluent the area is and what people can afford to pay.
The Picturehouses chain is justly famous for screening a more diverse range of films than most multiplex cinemas. Cambridge and Bury’s variety of films is greater than the local multiplexes; indeed they often show more than twice as many films per screen. The Picturehouses are also able to screen films in non-digital formats, an increasingly rare ability that allows an even wider array of films to be offered. The Cambridge Picturehouse regularly screens films in 70mm and relies on its network of contacts to acquire these prints. Screenings are often accompanied by talks with visiting film-makers and actors, as well and other interactive sessions including film education. All this helps to differentiate the Picturehouse offering and to attract a different – and varied - clientele.
There are other reasons why customers choose the Picturehouse chain over the local multiplex. The cinemas have bars which offer hot food and are also often used as spaces for community gatherings, exhibitions and events. The cinemas are licensed and customers can take alcoholic drinks into screens with them. There are regular showings for Silver Screen (over 60s), Big Scream (parents with babies) and autism friendly screenings, as well as catering to student visits and other educational needs. These services are rarely offered at multiplex competitors, if at all.
The Picturehouse offers membership discounts to regular attendees. Other chains with membership offer smaller discounts and fewer free tickets to its members, a consideration which the Commission chose to overlook. Anyone buying the Picturehouses would provide a negligible price difference for customers attending more frequently and existing members of the Picturehouse chain would see immediate price increases. The Commission claims that prices may rise due to the purchase, but have provided no evidence that competition is a significant factor in setting prices in areas where there is greater competition. In the reports and research cinemas admit to monitoring prices of other cinemas, but no claims have been made that prices change as a result. The report also offers no evidence of the historic effects of competition in the sector, only on the unsubstantiated claim that the merger might increase prices in the future.
The Picturehouses in all three locations have also become a cultural and film-making hub for the wider community. For example, the Cambridge Film Festival, now in it’s 33rd year, is based at the Arts Picturehouse. The cinema also hosts other important festivals, showcasing world cinema from Africa to Korea and welcoming in short festivals on silent films and human rights. These screenings may not play to huge crowds, but they cater to a loyal audience that would need to travel to London for anything similar. Other local concerns including the Cambridge Film Trust, the Cambridge Film Consortium and smaller independent cinemas in the area, rely on the help of Picturehouse staff and its network of contacts for their own operation and any sale is likely to have a negative effect on their ability to operate. The Picturehouse group also uses its distribution arm to access to non-film events such as the hugely popular NT Live. These events could be reduced or under threat in the event of a sale. Even a brief period of closure of the Picturehouse would cause difficulties for these services, and could fundamentally change the cultural landscape of the city that any potential purchaser would find difficult to restore.
The Commission has asked for public submissions before September 10th on its proposals. In particular, it wants to understand the effect of any proposed sale on any relevant customer benefits. We believe that any potential sale is likely to lead to:
·equivalent or higher prices
·a reduction in the choice of films and events being offered
·a reduction in innovation and a risk to other events and venues which depend on the Picturehouses’ skills and infrastructure
These risks heavily outweigh the potential benefits of the sale to consumers. Please sign this petition to show you agree that Cineworld should not be forced to sell the three Picturehouses.
- Competition Commission
Stop the enforced sale of three Picturehouse cinemas
We believe that the potential sale or loss of the Picturehouse cinemas in Cambridge, Bury St. Edmunds and Aberdeen will be damaging to consumers and to the fabric of the local area. Such a sale is likely to lead to some or all of the following effects: an increase in prices, especially for the 30% of cinemagoers who visit the cinema at least once a month, to a significant loss of choice in the variety of available films and live events. It will also put at risk other services that depend on the infrastructure currently in place, including film festivals, local trusts and independent cinemas. Any such effects will heavily outweigh the potential benefits of maintaining the previous level of competition.
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