In a move that could upend the US theatrical exhibition landscape, the Antitrust Division of the Department of Justice has announced that it will seek court approval to terminate the Paramount Consent Decrees.
The Paramount Consent Decrees went into effect in 1948 following the decision of the Supreme Court in United States v. Paramount Pictures that the major studios were violating antitrust law. At that time, the studios had total control over all aspects of the industry. They had talent under long-term contracts, full control over production and ownership of the theaters in which their movies were shown. When it came to licensing pictures to theaters that they didn’t own, they indulged in practices such as block booking—forcing theaters to book less attractive features in order to get the more desirable ones—and circuit dealing—offering to deal exclusively with favored theater chains in order to extract more favorable terms. The DOJ’s move would permit the studios to get back into theater ownership immediately and, after a two-year adjustment period, would lift the ban on block booking and circuit dealing.
In a speech before the ABA, Assistant Attorney General Makan Delrahim explained that the DOJ’s position is that the Consent Decree has served its purpose. Given the passage of time and the effect of the decree itself, he said, there is no way that the studios could reinstate the horizontal cartel of the late 1940s. Vertical integration, moreover, is no longer subject to blanket prohibition under current antitrust law. As a further factor in the DOJ’s decision, Delrahim pointed to the changes in the theatrical exhibition business that have been wrought by streaming services.
The National Association of Theater Owners came out in opposition to the proposal last year when the DOJ first announced that it was evaluating the Consent Decree. Following the Department’s recent official announcement, the Directors Guild of America has likewise announced its opposition, calling it a “step in the wrong direction.”