Stelios threatens to sue over film distribution restrictions

The Greek entrepreneur, Stelios Haji-Ioannou, is threatening to sue major film distributors in a dispute over his "EasyCinema" project which is to start this month.

He is embroiled in a fight with the studio-owned distributors, Columbia Tristar, Disney, Fox, Universal Paramount and Warners, which refuse to hire first-run films to him for screening at a 10-screen, 2,000-seat cinema he has leased at Milton Keynes.

The US businesses help recoup their production costs through distribution fees based on a percentage of the take, or through a charge for each person who views the film.

Mr Haji-Ioannou wants to pay a flat rate for hiring a film for a specified time, which would make it simpler to calculate the average price he needs to charge, and to reduce it as required.

The EasyCinema scheme is simple: instead of pricing tickets at £5 or more for times when cinemas usually play to a handful of people, prices will start at about 20p for those who book in advance. Prices will be higher for those buying nearer the showing time or for popular times, such as Friday nights.

Cinemas have an average occupancy of 20 per cent. Although attendances reached a record last year, having risen 68 per cent over the past 10 years to 174 million, the key driver is still the release of blockbusters such as Lord of the Rings and Harry Potter.

Getting access to such films is essential for the EasyCinema concept, although it has permission to hire some films that have already been shown.

Mr Haji-Ioannou plans to start showing films on May 23.

EasyCinema calculates it needs to sell about a million seats at an average of £1.50 each to break even in the first year. "Some of the distributors want to charge £2 per head," said EasyJet's James Rothnie. "But we can't make a profit selling a seat for 20 pence if we then have to pay the distributor £2." He said the contracts the distributors were demanding amounted to restrictive pricing, which is illegal. EasyCinema said it was prepared to go to court. None of the distribution companies contacted by the Independent would return calls.

In 1994, when the Monopolies and Mergers Commission investigated similar complaints from exhibitors, it found "such refusals to supply [were] reasonable given that distributors had no individual market power".