Justice: Studios Could Own Cinemas Again

Justice Studios Could Own Cinemas Again

A new report in The Wall Street Journal indicates that the U.S. Justice Department is making a move to completely obliterate what are known as the ‘Paramount Consent Decrees’.

That ruling has been in place since a Supreme Court decision in 1948 and has regulated how movie studios distribute films. Essentially they meant that film studios like Disney, Warners and Paramount could not own cinemas (bar the odd singular exceptions like the El Capitan) and at the same time rendered some unsavoury distribution practices such as block booking and circuit dealing illegal.

The report says the Justice Department’s antitrust division has concluded that the rules have “outlived their usefulness” in a very different world now. Makan Delrahim, head of the division, said in a speech to the American Bar Association fall forum:

“We have determined that the decrees, as they are, no longer serve the public interest, because the horizontal conspiracy – the original violation animating the decrees – has been stopped. The Division finds the consent decrees no longer meet consumer interests.”

With the launch of direct-to-consumer streaming platforms though, especially from the studios themselves with the just-launched Disney+ and the upcoming HBO Max and Peacock, studios can now sell their films directly to customers. As a result, Delrahim says the antitrust division shouldn’t stand in the way of ‘consumer-enhancing innovation’.

The Justice Department will reportedly ask a court to terminate the decrees within the next few days to weeks. There will, however, be a two-year sunset on circuit dealing and block booking and those will be under review with Delrahim saying: “The Division will review the vertical practices initially prohibited by the Paramount decrees using the rule of. If credible evidence shows a practice harms consumer welfare, antitrust enforcers remain ready to act.”

The exhibitors union, the National Association of Theatre Owners, has urged the department to retain the ban on block-booking saying studios could force cinemas to accept multiple films they don’t want in order to get the few blockbusters they do – in the process crowding out smaller movies.

Should the deal go forward, it would easily allow companies such as Disney, Netflix and Amazon to buy their own cinemas or even cinema chains. It would also mean that smaller independent films will find it much harder than it already is to get a release while independent theaters could well die out even faster. It also means smaller studios could cut back their number of releases due to lack of available screens.

Source: The Wall Street Journal & Variety