Alasdair Smith Competition Commission dismisses concerns on Cambridge Picturehouse

interior17:22 Tuesday 8th October 2013
BBC Radio Cambridgeshire

[C]HRIS MANN: The fight to save the Arts Picturehouse in Cambridge is hotting up. Its supporters are now planning a public meeting. It follows a decision by the Comptitions Commission that the owners of the Picturehouse brand, Cineworld, must sell the cinema in Cambridge. Well joining us from London I have Alasdair Smith, who is Deputy Chair of the Commission, and a Chairman of this enquiry. Hello Alasdair.
CHRIS MANN: Thank you for joining us Alasdair, live from your offices. And in the studio with me is Mark Liversidge, who started a petition against the sale. Hello Mark.
MARK LIVERSIDGE: Good evening.
CHRIS MANN: Let’s just bring people up to speed on this Alasdair. Why do you say that this cinema must be sold?

ALASDAIR SMITH: Because we think that the mergers in which Cineworld took over the Picturehouse means that there’s a substantial reduction in competition in the cinema market in Cambridge, and that that’s likely to have undesirable effects on consumers.
CHRIS MANN: So in Cambridge there’s the Vue, and there’s the Cineworld, and there’s the Arts Picturehouse.
CHRIS MANN: That’s the situation. So Cineworld bought the Arts Picturehouse, and you think that makes it unfair.
ALASDAIR SMITH: We think that that’s likely to give them the opportunity to raise the prices that they wouldn’t otherwise be able to  do if they faced stronger competition.
CHRIS MANN: OK. Mark, what do you think of that summary?
MARK LIVERSIDGE: I think there’s two problems with the findings that the Commission have made so far. The first is that they’ve completely ignored the benefits of memberships on the cinemagoing prices, in particular the fact that the majority of Picturehouse attendees have a membership, which is going to mitigate any potential price increases. The other issue is that they’ve misjudged the market completely. And 13,000 people have signed a petition to that effect, which has been completely ignored in the final report.
CHRIS MANN: Does that make any difference to your views Alasdair?
ALASDAIR SMITH: Obviously we are aware of membership schemes, a very important part of the offer, both at Cineworld, and at Picturehouse. But we don’t think that membership schemes as such make a significant difference to the competitive analysis. To put it simply, a new owner of either Cineworld or Picturehouse in Cambridge would have the possibility of establishing a similar membership scheme for its customers.
CHRIS MANN: But you talk about a new owner. Who’s that going to be?
ALASDAIR SMITH: That’s up to the marketplace.
CHRIS MANN: But who is there in the marketplace?
CHRIS MANN: Can you answer that one?
MARK LIVERSIDGE: Yes. There are three potential sets of people who could come in on this. The first of those is the larger multiplexes, who’ve shown no interest in running cinemas of the size of the Picturehouse. The second is an independent operator like Curzon or Everyman. If they were to come in and operate this, the current provincial cinemas they operate offer les membership discounts, so prices would go up for consumers. They’ve also shown less ability to programme with the diversity that the Picturehouse do in their own provincial cinemas. The third option is an independent cinema. That’s got to be set up. It’s not like the takeover from the cinema to the Picturehouse. This would be almost starting from scratch, and puts everything the Picturehouse currently run at risk.
CHRIS MANN: Alasdair?
ALASDAIR SMITH: Who is likely to come in depends on which cinemas Cineworld chooses to sell. I agree with Mark that if it’s the existing Cineworld cinema that’s sold, then it’s more likely to be a multiplex operator, an existing multiplex operator, that comes in, whereas if they choose to sell Picturehouse, then it’s likely to be a different kind of operator. I know no reason why other operators of independent cinemas or independent cinema chains should provide customers with a worse deal than Picturehouse.
CHRIS MANN: You see one of the fears here is that you’re actually going to narrow the choice just down to two cinemas. That there won’t be a taker for the Arts Picturehouse of the sort of quality that people feel there is right now. Actually you will lessen choice.
ALASDAIR SMITH: I’m very sorry, but a lot of the coverage that there’s been of this issue, particularly in Cambridge, has implied that somehow we’re seeking to close down a cinema. That’s absolutely not what we want to do. We want to increase competition. Closing down a cinema would decrease competition.
CHRIS MANN: Well obviously. Can I ask you about the situation up the road in Bury St Edmunds? There are only two cinemas. One of them as I understand it, one of them is Cineworld isn’t it? And one of them is Picturehouse. So what are you going to tell them?
ALASDAIR SMITH: They have to sell one of these cinemas, and Cineworld have announced today that they intend to sell the Picturehouse in Bury St Edmunds. And what I was about to say was we’ve had discussions with a number of parties since we issued our provisional findings. All the indications are that (there’s) a very active market in the buying and selling of cinemas. What’s happening in this case is not unusual, and we confidently expect that there will be healthy interest in whichever cinemas Cineworld chooses to sell in Cambridge, and in Bury St Edmunds.
CHRIS MANN: Well there you are Mark. You don’t have to worry.
MARK LIVERSIDGE: I think we should be extremely worried, because there’s no demonstration that any other competitor who will come in will offer the same level of services. You can almost guarantee an increase in costs. And the Commission has no powers to ensure those costs don’t increase.
CHRIS MANN: Alasdair, are you going to force them to sell? Have you got the powers to do that?
ALASDAIR SMITH: Oh yes, we certainly have the .. that’s what we’re doing. We are forcing them to sell one cinema in Cambridge and one cinema in Bury St Edmunds. And unlike Mark, I’m confident that competition in the market is the best guarantee that customers, both in Cambridge and in Bury St Edmunds, have of pricing and quality of provision that there will be after the divestment takes place.
CHRIS MANN: Alasdair Smith, Deputy Chair and Chairman of the enquiry. Mark Liversidge, thank you both very much indeed for joining me.