Formula Deal Law and Legal Definition
The term formula deal refers to a licensing agreement between motion picture distributors and independent circuits to exhibit a feature in all theaters in a specific area in which the license fee of a given feature is measured by a specified percentage of the feature's national gross. [United States v. Loew's Inc., 1950 U.S. Dist. LEXIS 1897 (D.N.Y. 1950)].
Formula deals unreasonably restrain competition. “The pooling of the purchasing power of an entire circuit in bidding for films is a misuse of monopoly power insofar as it combines the theatres in closed towns with competitive situations”. [Redwood Theatres v. Festival Enters., 200 Cal. App. 3d 687, 695 (Cal. Ct. App. 1988)].