Reel Fed Up
By Ian Mount

(FORTUNE Small Business) – Why would a blockbuster such as Star Wars: Episode III play at an old one-screen theater when it could go to a sparkling new multiplex across the street? According to Scott Wallace, CEO of Wallace Theaters in Portland, Ore., it's because large movie-theater chains are strong-arming the studios into giving them exclusive distribution rights to hot films by threatening not to run them at all. In September, Wallace, whose company has 53 theaters across the country, filed suit against Carmike Cinemas (with 311 locations) over its alleged use of that practice. Carmike declined to comment, but Wallace says that his company lost $275,000 from not being able to show Revenge of the Sith in his Bozeman, Mont., theater alone. There are other signs that small theaters are being heard: In September the California state attorney general issued subpoenas to major studios about exclusivity, and another small chain, Flagship Theaters in Palm Desert, Calif., has filed a similar lawsuit.