A federal judge, in a major victory for the Justice Department, yestderay blocked and may have killed the introduction of a controversial new pay-television service that combined the resources of four of the nation's leading motion picture companies and Getty Oil Co.
U.S. District Judge Gerald L. Geottel issued a preliminary injunction barring the new service, Premiere, from beginning operations on Jan. 2. Premiere is a joint venture of Getty, Columbia Pictures Industries Inc., MCA Inc., Paramount Pictures Corp. and Twentieth Century-Fox Film Corp. The decision followed 11 days of testimony, which ended Dec. 8.
The Justice Department filed an antitrust suit and subsequent request for a preliminary injunction against Premiere last August charging that the company would fix the price of movies and that competition between the movie firms and other companies would be limited.
The crux of the case, however, stemmed from a piece of the Premiere plan under which new films would be withheld from distribution to other companies for nine months. "We are very pleased with the decision," said Stanley Gorinson, chief of the special regulated industies section of the antitrust division.
In a 60-page opinion, Geottel said that more important that the interests of the industry or the defendants "is the public's interest in enforcement of antitrust laws and in the preservation of competition." Goettel said the Premiere venture "has a high potential for the ultimate raising of prices."
Goettel said the Premiere pricing mechanisms "are likely to enable the defendants to drive up the prices for use of their motion pictures and are likely to have the indirect effect of driving up the prices for those major motion pictures not controlled by the defendants."
Although the partners will consider appealing the decision, the injunction probably spells the end of Premiere. "If the injunction goes in and our other avenues are explored, Premiere is finished," said M. Christopher Derick, president and chief operating officer of Premiere.
Premiere had said that it was only trying to break what company and motion picture industry officials feel is a monopoly over the pay-television business by Time Inc.'s Home Box Office service, which controls close to three-quarters of the field. Derick said the decision insures "HBO's monopoly over the pay-television market."
Premiere already has spent about $12.5 million on start-up costs, although Derick said that at least half the costs were for transponder space on satellites that were to be used to distribute Premiere's films to cable systems around the country. Much of that satellite-leasing cost may be recovered by Premiere reselling that space to other cable programmers.
Getty Oil, which has assets of about $6 billion and is already in the cable business as the primary partner in a sports network, had pledged to invest up to $30 million in Premiere.
The National Cable Television Association, the industry's leading trade association, had raised question about the nine-month "window" over the new films. A spokesman for the trade group said the decision "reinforces NCTA's initial concerns as to the structure and proposed practices of Premiere" and added they hope the final resolution of the case "will be in the best interests of the public and the cable industry."