NEW YORK (TheStreet) -- Movie theater chains are hearing it from everyone.
Not only is the U.S. Department of Justice investigating Regal Entertainment (RGC), AMC Entertainment (AMC), and Cinemark Theatres (CNK) but Hollywood's largest studios are demanding changes in how box office office sales are split.
While theaters have long relied the Hollywood studios for enticing films, if the studios try to squeeze theaters on box office sales, they ran the risk of losing top billing or wide distribution. But as more movie watchers turn to Netflix (NFLX), Time Warner's (TWX) HBO NOW and Hulu, among other options, film studios are seeking better terms from the theater chains.
This complex relationship is further muddled by a federal probe into a long-running complaint from smaller, independent movie theater operators that the chains and the studios have fostered an anti-competitive environment that warrants judicial remedies.
At the heart of the DOJ's investigation is a distribution practice called "clearances," which give theater chains exclusive rights to show certain movies for a certain length of time. The investigation is looking into whether clearances prevent smaller theaters from showing highly anticipated movies concurrently with the likes of Regal, AMC and Cinemark.
Court fights over clearances have happened before but the practice has remained intact, at least for now, said Doug Stone, president of Box Office Analyst.
"Clearances have pretty much always been part of the industry," Stone said. This old, dated practice though, Stone also said, doesn't make much sense especially now with the movie industry facing competition from on demand and streaming video services.