HOUSE BILL REPORT

ESHB 144

BYHouse Committee on Commerce & Labor (originally sponsored by Representatives Wang, Patrick, Locke, L. Smith, Chandler, Unsoeld, Nealey, Armstrong, Fisher, Lux, Fisch, Cole, Nutley, Appelwick, Sayan, Allen, Valle, Brough, Dellwo, Gallagher, Baugher, Basich, Brooks, Fuhrman, Ebersole, Moyer, Sutherland, Crane, Winsley, K. Wilson, Leonard, Rayburn, Belcher, Scott, Hargrove, Holm and McLean)

Affording exhibitors a fair opportunity to bid for motion pictures released in this state.

House Committe on Commerce & Labor

Majority Report:     The substitute bill be substituted therefor and the substitute bill do pass.  (7)

     Signed by Representatives Wang, Chair; Cole, Vice Chair; R. King, O'Brien, Patrick, Sayan and C. Smith.

Minority Report:     Do not pass.  (4)

     Signed by Representatives Fisch, Fisher, Sanders and Walker.

House Staff:Joan Elgee (786-7166)

AS OF HOUSE SECOND READING FEBRUARY 18, 1987

BACKGROUND:

To prevent unfair practices in the motion picture distribution and exhibition industry, the legislature in 1979 enacted the motion picture fair competition act.  The primary provisions of the act:  (1) prohibit blind bidding, in which an exhibitor agrees to license a film without having had an opportunity to view the film; and (2) specify procedures to be followed in the licensing process.

A distributor must provide a trade screening of a film prior to licensing.  Notice of the screening must be given to all exhibitors from whom bids will be solicited or with whom negotiations will be conducted.

Motion pictures may be distributed by bidding or negotiation.  In a 1986 decision, the Washington Supreme Court held that the statutory licensing procedures must be followed whether the picture is licensed by bidding or by negotiation.  These procedures include:  (1) the distributor must make certain disclosures including whether the run is exclusive and the names of all exhibitors being solicited; (2) offers or proposals must be in writing and opened in the exhibitors' presence; and (3) the offers or proposals, and award must be disclosed. 

Enforcement is by private action.  Any aggrieved person may bring suit for an injunction or actual damages.  The prevailing party is entitled to attorneys' fees.

SUMMARY:

When an exhibitor notifies a distributor that it wishes to bid, the distributor must solicit bids for first runs of motion pictures released by the distributor in the state.  The bid opening must be in the largest city in the state.  The license shall be awarded to the best bid, which is the best bid determined by the distributor, considering the location, quality, seating capacity, financial responsibility of the exhibitor, proposed length of run, rental terms, guarantees, quality of projection, competence of the projection staff and any other relevant factor.

If no bids are received in response to a solicitation, the distributor may license the film by another method. Also, an independent distributor may award a license by a method other than bidding if requested by a local exhibitor.

If a picture is licensed by bidding and the parties modify the licensing agreement, the distributor shall notify all persons who submitted bids of the modification.

The chapter does not apply to sneak previews, film festivals, or other occasional, isolated, nonconsecutive exhibition.

The enforcement provisions are retained; however, an aggrieved person may elect to have the dispute submitted to an arbitration panel.  The panel will be composed of persons selected by each of the parties to the dispute, and additional arbitrators chosen by the arbitrators named by the parties.  Within 72 hours of the naming of the panel, the panel shall hold a hearing and render a decision on whether the chapter has been violated.  The panel may grant any relief, except damages, which will rectify the violation, and shall consider whether it is most equitable to order relief respecting future pictures.  Additional procedures for the conduct of the arbitration are provided. On appeal, a trial de novo is authorized, and if the appealing party fails to improve its position, the court shall award costs and reasonable attorney's fees to the other party.

Fiscal Note:    Attached.

House Committee ‑ Testified For:     Ray Hallett, Hallett Cinemas; Tom Moyer, Lacey Cinemas.

House Committee - Testified Against: Michael Mercy, Yakima Theaters; Bud Saffle, Motion Picture Exhibitors of Washington; Gary Tucker, Egyptian Theater manager; Bruce Russell, Local 175 IATSE; Darlene DeMaria, Buena Vista Distributing Company; Gordon Walgren, Motion Picture Exhibitors of Washington.

House Committee - Testimony For:     The current practice is not working. Distributors are awarding films not based on the highest bid, but on whether an exhibitor has theaters in cities such as Los Angeles.  Other distributors have stopped bidding altogether.  Federal court lawsuits to seek fair competition are time-consuming and costly. Within the last 180 days, 4000 theaters have been bought out.

House Committee - Testimony Against: Requiring bidding will cause bidding wars and put money in the pockets of the distributors.  Small exhibitors will not be able to compete.  Jobs of union projectionists will be jeopardized and the time for screening will be reduced.  The existing law is adequate to protect those who can prove they have been harmed.