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Federal judge grants DOJ bid to scrap antitrust rules limiting how movies are distributed to theaters
igorovsyannykov / Pixabay
Federal judge grants DOJ bid to scrap antitrust rules limiting how movies are distributed to theaters

A US District Court judge on Friday granted the federal government’s request to terminate a set of antitrust rules, the so-called Paramount Decrees, that “for over seventy years have regulated how certain movie studios distribute films to movie theaters.”

The decrees, a result of the landmark 1948 Supreme Court case United States v. Paramount Pictures, Inc., banned Hollywood’s largest studios (including MGM, Paramount, 20th Century Fox, Warner, Universal, and Columbia) from “[controlling] the motion picture industry through their ownership of film distribution and exhibition.” The Court sustained findings that “[the studios] had engaged in a wide-spread conspiracy to illegally fix motion picture prices and monopolize both the film distribution and movie theater markets.”

The conditions of the decrees forced the companies to sell the theaters they owned, outlawed “block booking” (the practice of selling films as a package to coerce theaters into playing less-profitable films), and limited actions that prioritized certain theaters over others.

In late 2019, the Antitrust Division of the US Department of Justice moved to eliminate the decrees. In a press release issued Friday the DOJ said that “the motion picture industry has undergone considerable change” since the inception of the decrees. It credited multiplex theaters and technology advances as rendering the need for the decrees obsolete. “New technology has created many different distribution and viewing platforms that did not exist when the decrees where entered into… today’s consumers can view motion pictures on cable and broadcast TV, DVDs, and over the internet through streaming services.”

In a 17-page Order, Judge Analisa Torres acknowledged these changes as one of the reasons to grant the government’s request. The court found that termination was in the public interest, stating that “it is unlikely that [the studios] would collude to once again limit their film distribution to a select group of theaters in the absence of the decrees” and concluded that the government has “offered a reasonable and persuasive explanation” for terminating the decrees.

Moving forward, the Order includes a two-year “sunset” provision for ending the block booking ban, in an attempt to minimize market disruption and to “provide movie theaters a transitional time period to adjust their business models and strategies to any proposals to change the film-by-film, theater-by-theater licensing regime.”