Megastar wars

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Eight months after being sued by six domestic competitors, Megastar Media Company finally spoke up.

Brian Hall, Chairman of Megastar Media Company, refused to comment on the company's actual market share. But he told reporters that even if the firm held a 30 percent share of the Vietnamese market, it is not inviolation of local laws.

"Firms cannot do certain [things] that hurt other players in the game if they hold a dominant market position," Hall said during a Tuesday press conference.

The complainants, which include Saigon Cinema, Hanoi Movie and Dong Nai Movie filed a formal grievance with the Vietnam Competition Authority in June accusing Megastar of abusing its market position to fix prices, hurting their businesses and moviegoers alike.

Since it began doing business here in 2006, Megastar has won exclusive rights to distribute several foreign blockbusters like Avatar, New Moon and Ice Age in Vietnam.

The company, a US$8 million joint venture between local publisher Phuong Nam and Envoy Media Partners of the British Virgin Islands, is also a cinema operator with its own theaters.

Among their stated objections, the six domestic complainants have decried Megastar's introduction of a VND25,000 per capita minimum on all tickets sold.

Hall said the per capita minimum policy was an element introduced by foreign studios, which supplied films to Vietnamese market through Megastar.

Megastar, he said, merely acts as an intermediary between the studios and cinemas in Vietnam, he said.

The policy is considered standard in markets around the world, Hall said and provides a guarantee for studios "selling" first run blockbuster prints to cinemas in different markets.

"The policy is not an increase of price," said the chairman, who added that the move did not violate Vietnam's statutes on competition.

The chairman also denied allegations that Megastar had compelled theater operators of to submit to extraneous "bundling" obligations.

He said the operator never had a policy of tying the distributor of one movie with another. Studios expressly prohibit the practice, Hall indicated.

Hall said the terms on movie theaters were directly relevant and essential to the contracts between Megastar, the studios and the cinemas. That said, he argued, the negotiated terms were perfectly legal.

Following Hall's press conference, the complainants issued a statement pledging that they had provided hard evidences of the firm's wrongdoing to the proper authorities.

"We believe in the law and await a final determination from the authorities," they said in a statement issued Tuesday. The six distributors claimed their lawsuit would ultimately benefit their customers by protecting fair competition.

The dispute is being reviewed by the Vietnam Competition Authority which is expected to issue a verdict next week.

Megastar now runs six cineplexes in big cities across Vietnam.

The operator earned $14 million revenue including $9 million from movie box offices in 2009, according to Hall. He said the revenue would reach $20 million (including $14 million from box office sales) this year.

Hall attributed the considerable revenue to the firm's investment of $15 million in new theaters in 2008.

The joint-venture closed a $4 million eight-screen theater in Ho Chi Minh City's District 7 at the end of April due to poor ticket sales.

The country's total box office revenues increased to $25 million this year from $15 million last year, according to Megastar.

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