A federal judge on Friday (8/7) ruled in favor of efforts by the Department of Justice (DOJ) to eliminate antitrust decrees which had prevented studios from owning movie theaters. The Paramount Consent Decrees had been in effect for more than 70 years.
The decrees were put in place originally to thwart major studios from monopolizing the motion picture industry through their ownership of film distribution and exhibition. Resulting from a Supreme Court ruling against Paramount and several other studios, the decrees enacted in 1948 significantly altered the structure of the motion picture industry. First, the Supreme Court ordered and the decrees mandated a separation between film distribution and exhibition by requiring the five defendants that then owned movie theaters to divest either their distribution operations or their theaters. Going forward, the decrees prohibited those defendants from both distributing movies and owning theaters without prior court approval. Second, the Supreme Court and the decrees outlawed various motion picture distribution practices including block booking (bundling multiple films into one theatre license), circuit dealing (entering into one license that covered all theaters in a theatre circuit), resale price maintenance (setting minimum prices on movie tickets), and granting exclusive film license clearances for specific geographic areas.
Fast forward to today, though, and the DOJ has made a case for the decrees no longer being necessary. None of the studios own a significant number of movie theaters. Additionally, unlike 70 years ago, most metropolitan areas currently have more than one movie theatre. The first-run movie palaces of the 1930s and ‘40s that had one screen and showed one movie at a time have been replaced today by multiplex theaters that have multiple screens showing movies from many different distributors at the same time. Finally, consumers today are no longer limited to watching motion pictures in theaters. New technology has created many different distribution and viewing platforms that did not exist when the decrees were entered into. After an initial theatre run, today’s consumers can view motion pictures on cable and broadcast television, DVDs, and over the Internet through streaming services.
U.S. District Judge Analisa Torres agreed this week that eliminating the decrees makes sense. She wrote in her ruling, “Given this changing marketplace, the court finds that it is unlikely that the remaining defendants would collude to once again limit their film distribution to a select group of theaters in the absence of the decrees and, finds, therefore, that termination (of the ownership restrictions) is in the public interest,”
Judge Torres’ ruling also sets the stage for the lifting of restrictions against block booking and circuit dealing in a couple of years.
Whether the rescinding of the consent decrees will translate into studios at some point seeking ownership of theaters remains to be seen. Clearly this is a time when the theater business is hurting due to the impact of the COVID-19 pandemic.
