This article was originally published on Viking Social Agency on December 12, 2019
In 1948, the US Supreme Court ruled against film studios owning their own theatres. A case called United States v. Paramount Pictures, inc. or just the Paramount Decrees, was a landmark case that made it illegal for studios to own theatre chains and prevented them from holding exclusivity rights to which theatres would show their movies. They deemed the act of owning these theatres as a violation of the United States antitrust law, which prohibits certain exclusive dealings. This case would fundamentally change how Hollywood movies were distributed and exhibited.
Now, more than 70 years later, this case is being overturned. Before this landmark case, film studios controlled every level of filmmaking. They made actors, directors and other talent, sign exclusive contracts in order to control their image and the types of films they made. Studios controlled movie theatres which meant that if a 20th Century Fox movie was being released, then one could only view it in a 20th Century Fox owned movie theatre.
The closest comparison to something like that these days would be Walt Disney Studios owning the El Capitan Theatre in Hollywood. That theatre can only show Walt Disney Studios films, such as animated features, Star Wars, and Marvel films. The reason why they are still able to own and operate the theatre is because they don’t exclusively show new movies there. They hold special events to allow fans to watch old and new classics in the theatre.
“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,” said Assistant Attorney General Makan Delrahim in a speech to the Department of Justice (DOJ). In August of 2018, the DOJ announced that they would be reviewing the Paramount Decrees, and potentially overturning them. Delrahim argues that the passage of time has made the decrees obsolete and that it would be impossible for studios to go back to the way things were.
However, the decrees also prevent “block booking”, which essentially means, a studio forcing a theatre chain to carry their films. The big studios are already accused of doing this by many, though this has not been proven. Claims of Disney forcing theatres to play Star Wars: Episode VIII – The Last Jedi, in a certain amount of screens was common, though again, nothing was proven. These big tentpole films tend to push out the smaller films due to “block booking”. These claims are potentially why the National Association of Theatre Owners (NATO) filed a comment urging the DOJ to not overturn the decrees.
It’s true that the industry has changed and theatre attendance seems to be in a steady decline (Potentially due to rising ticket prices). Overturning these decrees might not be the right choice to fix that. Luckily there will be a “sunset period” of two years to allow studios and theatre owners to prepare for the new rules. The DOJ seems ready to act when they deem it to be necessary. “The Division will review the vertical practices initially prohibited by the Paramount decrees using the rule of reason. If credible evidence shows a practice harms consumer welfare, antitrust enforcers remain ready to act.” Delrahim said in a statement.
If the DOJ goes through with overturning the decrees, something very similar to the old “studio system” could rise from these ashes. For better or worse, the industry landscape is changing. Large studios are either doing incredibly well, or are on their last legs, and the one(s) that bring in the most box office revenue are making bigger demands of theatre chains. Getting rid of the Paramount Decrees could end up being a major blow to independent and major theatre chains.