Theater Anti-Trust 1948 action overturned 0

[Bosco685]

Judge Agrees to End Paramount Consent Decrees

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After nearly three quarters of a century being the quiet influence on how Hollywood operated, the Paramount Consent Decrees are officially over. On Friday, a New York federal judge granted a motion by the U.S. Department of Justice to terminate the movie industry's long-lasting licensing rules.

 

The Paramount Consent Decrees have been in effect since the late 1940s when the government pursued a major antitrust action against film studios, which in those days, were vertically aligned with national theater chains. As a result of the U.S. Supreme Court's landmark 1948 decision in United 
States v. Paramount Pictures, the studios had to divest themselves of their exhibition holdings. A court-approved settlement then established rules governing the licensing relationship between certain studios such as Paramount and Warner Bros. and theater owners. Other studios such as The Walt Disney Company weren't part of the original case, but have nevertheless been guided by those Paramount Consent Decrees.

 

But with some deregulatory fervor, the Trump-era DOJ has been taking a hard look at long-lasting behavioral remedies for older antitrust abuses. Last November, the DOJ moved to terminate the decrees. In the government's estimation, total bans on practices like "block-booking" (bundling multiple films into one theater license) and "circuit dealing" (the practice of licensing films to all movie theaters under common ownership, as opposed to licensing each film on a theater-by-theater basis) had outlived their usefulness. It was time to sunset them and get rid of other rules. Some indie theaters warned the move would usher in new consolidation with tech giants like Amazon swooping in to acquire theaters.

 

U.S. District Court Judge Analisa Torres agrees with the government that times have changed, and so must the rules.

 

"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 is in the public interest," she writes in a 17-page opinion.

 

She accepts that certain conduct once deemed per se illegal may now be pro-competitive as theaters fight to remain relevant in the tech age while lingering anticompetitive behavior would be better scrutinized through new legal actions absent of strict rules.

 

As for the possibility that terminating the ban on vertical integration would allow major movie studios to merge with large national theater circuits, the judge notes that such restrictions have never applied to certain studios like Disney and adds that "the Court finds that changes to antitrust administration, in particular, the HSR Act, provide federal antitrust agencies with notice and the opportunity to evaluate the competitive significance of any major transaction between a movie distributor and a theater circuit, which suggests a low likelihood of potential future violation."

 

The changes with surefire impact, though, will be a lifting of the ban on studios licensing their works on a packaged basis. Again, the judge looks to a shifting market as a justification for allowing this to happen two years hence when a sunset period expires.

 

"In today’s landscape, although there may be some geographic areas with only a single one-screen theater, most markets have multiple movie theaters with multiple screens simultaneously showing multiple movies from multiple distributors," states the order. "There also are many other movie distribution platforms, like television, the internet and DVDs, that did not exist in the 1930s and 40s. Given these significant changes in the market, there is less danger that a block booking licensing agreement would create a barrier to entry that would foreclose independent movie distributors from sufficient access to the market." 

This opens the door for companies like Amazon to purchase large theater chains going forward, along with studio monopolies grown further.

[D84]

1 hour ago, Bosco685 said:

Judge Agrees to End Paramount Consent Decrees

This opens the door for companies like Amazon to purchase large theater chains going forward, along with studio monopolies grown further.

Well, that's going to be very bad.

[Bosco685]

1 hour ago, D84 said:

Well, that's going to be very bad.

A Disney, Amazon or AT&T could purchase a theater chain and force them to run only their films for audiences from all that is being called out so far. 

[Bosco685]

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Major Hollywood history has been made today, as a ruling from the Department of Justice has officially terminated decades-long protections in the realm of theatrical exhibition. Known as “The Paramount Consent Decrees,” these protections covered everything from movie studios investing in/owning major theater chains to the way their films could be licensed and shown in theaters overall.

 

What Are The Paramount Consent Decrees?
In 1948, the Supreme Court Decision United States v. Paramount Pictures, Inc. ended three key practices when it came to theatrical exhibition. The decision agreed with the accusations that major studios, like Paramount and Warner Bros, had an unfair advantage when it came to releasing films to the general public. In an era where antitrust sentiments were fresh in the minds of the public, common practices such as vertical integration, block booking and circuit dealing were prohibited. Now, with each of those prohibitions off the table, as reported by THR, the following actions might become more commonplace in the near future.

 

Major Studios Could Buy Into Major Theatrical Chains
Thanks to United States v. Paramount Pictures, Inc., a major movie studio like Paramount was unable to hold a significant ownership stake in a major theatrical chain; something that falls into the term “vertical integration.” While we’ve seen streaming content producers like Netflix and Amazon trying to acquire theaters, respectively, on minor and major scales, the Paramount Consent Decrees have been seen as the law of the land that has held up such purchases.

 

With those restrictions being terminated, it would be possible for a movie studio like Universal to buy into, if not completely take over, theater chains like AMC Theatres or Regal Cinemas. Under vertical integration, a studio would own the means to both produce movies and to distribute them through their own favored theater chain. Hold on though, it gets worse.

 

Licenses To Show Big Ticket Blockbusters May Come Bundled With Other
The next prohibited practice, known as “block booking,” saw studios ensuring that a whole bunch of movies were bundled together when offering licensing packages to studios. Big blockbusters were bundled with smaller B-movies that were made and valued at cheaper rates. So in one fell swoop, a studio like Paramount was able to ensure that not only their big ticket titles were shown, but they used those movies as bait to sell off a bunch of unknown prospects. Overturning United States v. Paramount Pictures, Inc means that if a major studio wants to engage in such a deal again, the floodgates holding them back are now gone.

 

Returning to Disney as an example, the studio would now be allowed to dictate even more restrictive terms stating that if theater owners wanted to show Mulan in their locations, they’d also have to purchase the licenses to other films they want to ensure the success of; like, say Artemis Fowl, Onward, Soul and The One and Only Ivan. Oh, and back in the day, such agreements could done with merely a title and a dream, rather than a finished product on display. While we might not see such a gamble taking place at first, the door is now potentially open.

 

Theatrical Chains Might Be Able To Block Smaller Chains From Accessing Movies
The last and potentially scariest restriction to be lifted by overturning United States v. Paramount Picture is that of “circuit dealing.” Per historical precedent, circuit dealing was the practice of major chains buying all-in licenses for their entire chain; rather than on an individual basis per film, per location. So if you take the recent deal with Universal and AMC as an example, under the fall of this particular legal hurdle, Universal could issue a license to AMC to show a particular film or bundle of films with block booking in effect. However, IndieWire’s comments on a recent decision pertaining to circuit dealing brings back some recent, unhappy memories between those partners:

 

"If a studio decides to book with the competition in a given community, usually a Mom-and-Pop venue, then the exhibitor will threaten to bar that film (or future films) from playing the entire chain."

 

What Happens Next For The Paramount Consent Decrees
U.S. District Judge Analisa Torres’ decision to terminate the Paramount Consent Decrees isn’t an instant magic wand that removes these long held rules of fair play. According to Deadline, there will be “a two-year sunset period” before these decrees are taken down. After which point, it’ll be open season when it comes to the takeaways we’ve discussed above. But in the two year-ticking clock we’re about to see wind down, there could be a chance for more legal wrangling to try and undo this decision; something that’s even more important to consider with a new presidential election potentially changing the makeup of the Department of Justice in the years to come.

 

While the Paramount Consent Decrees leveled the playing field for indie moviehouses and big box cineplexes alike, their termination could lead to equal parts uncertainty and repeated history. Studios and theater chains are undoubtedly planning how to best take advantage of this brand new age of theatrical exhibition, especially when streaming platforms like Disney+ have further confused the waters. We’ll have to wait and see where things go from here, but as new developments make their way to the table, CinemaBlend will be here to help break them down for you, dear readers.

 

[media_junkie]

I may be in the minority, but I don't see this as that big of a deal anymore.  Yes back in the day the only place you could see a movie was at a theater.  No streaming, no VCR, no HBO, or cable TV.  Now you can catch a flick in so many places and so many ways it is insane.  Back in the day when a movie left the theater that was it, it was gone.  Now when a movie leaves in a theater (in 17 to 90 days now) you can catch it at home via redbox or streaming.  

Couple that with this covid-19 thing going on, and I honestly feel that that the days of movies making $11+ billion in theaters is over.  There is a segment of the population that will not be going back to movies again and just catching them at home.

Of course I may be wrong, and we will find out in 2 years when it kicks in, but again I don't think it is that big of a deal. 

[D84]

Though I think this is a bad idea, it won't affect me much. Honestly, I almost never go to the movies anymore since I have a decent home theater and people won't get of their  phones in the cinemas.

[Bosco685]

It will be interesting to see who pushed for this based on acquisitions that start taking place.