I’m going to devote this post to a very large news story that broke in the past few days that a lot of people have been talking about. And no, it’s not the verdict of the Michael Jackson trial.

Recently, Cineplex Galaxy LP here in Canada bought out its largest rival, Famous Players. With the merging of Cineplex Galaxy theaters and Famous Players theaters in Canada, Cineplex will now hold over 60% of the movie theater revenue in Canada, with over 1,300 screens across the country.

Of course, the competition is crying foul, saying that this move will push them out of business, despite the fact that Cineplex Galaxy has agreed to sell 35 theaters in order to win approval from the federal Competition Bureau. The competition claims that Cineplex Galaxy will use this clause to get rid of unprofitable and high-lease properties; they’re right. So what can they do to survive?

It is clear that the major competition to the Cineplex Galaxy mega-chain now must adapt in order to compete. In my humble opinion, the best way to do that is to capitalize on the large and burgeoning film industry of Canada, as well as the thriving foreign film industry. People may turn to Cineplex Galaxy for the Hollywood blockbusters (which are losing money and audience interest very quickly), but when was the last time you saw a megaplex show such critically acclaimed films as Moolaade, Jesus de Montreal and 5x2? There is a large market for foreign, Canadian and independent film in this country, which is being greatly ignored by the large multiplexes and is an excellent way for the competition to adapt to the changing Canadian cinema scene.

How does this amalgamation affect the everyday movie-goer? Well, the first thing that is clear is that the Famous Players $9.95 movie ticket deal will quickly disappear. Ticket prices will inevitably rise, but this is not the crux of the problem. Such a powerful force as the new Cineplex Galaxy will also have a considerable influence on film distribution in this country, and the real effect on viewers will be the reduction of the availability of a diversity of film and the rigid control of the distribution of movies.

What is being slighted in the whole discussion of this acquisition is the role of Viacom, the former parent company of Famous Players. David Olive, in the Toronto Star yesterday, wrote a brilliant article that dealt with the slow and steady of dismantling of Sumner Redstone’s media conglomerate.

Already having shed Blockbuster from the Viacom fold, Redstone has been reconsidering the role of the various parts of his media stronghold, spinning off Paramount Pictures into a new separate operating framework, separating CBS from cable channels like MTV and Comendy Central, and possibly shedding baggage like the various themeparks (including Canada’s Wonderland just north of Toronto). Viacom is not the only large conglomerate that is consciously coming apart: Time Warner and Vivendi are another two of many large media conglomerates that have been releasing assets.

Which reminds me of an article I read recently on Seth Godin’s blog where he claimed that “small is the new big.” Stating examples such as Craigslist and JetBlue, Seth goes on to show us how “small gives you the flexibility to change the business model when your competition changes theirs.” Which is perhaps what Sumner Redstone realizes. By breaking up the conglomerate into smaller pieces and getting rid of assets it doesn’t need, Viacom will be able to better compete against the new smaller, adaptive, and more personal companies that also realize that small is the new big.