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Justice Department to change how studios distribute films by revoking decades-old rules
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Justice Department to change how studios distribute films by revoking decades-old rules

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Removing the Paramount consent decrees changes the theater industry

A number of shifts in the movie industry have altered the theater-going experience in recent years. From the rise of streaming to the reliance on Chinese markets to the emergence of superhero blockbusters, everyone from ticket-buyers to studios have been affected. Now it looks like another drastic change is on the horizon, as the Justice Department is moving to revoke a decades-old ruling that could have a massive impact on film distribution.

According to The Wall Street Journal, the DOJ is readying a motion in federal court to terminate the Paramount consent decrees. The rules came into place in 1948 following a lawsuit the government filed against the major movie studios in the late 1930s. When the DOJ won the case, a number of distribution practices became illegal, which Slashfilm summed up nicely: “block booking (bundling multiple films into one theatre license), circuit dealing (entering into one license that covered all theaters in a theater circuit), resale price maintenance (setting minimum prices on movie tickets), and granting over-broad clearances (exclusive film licenses for specific geographic areas).”

The DOJ thinks these rules are outdated in the modern age. So what would happen if they were no longer in place? For one, studios could own theaters again, meaning there’s the potential of a Netflix Multiplex, or a new Amazon subscription tier that includes two screenings a month in an actual cinema. In turn, that could leave people in smaller markets with even fewer options when it comes to a night at the movies.

More pressing, there’s major potential for studios to squeeze theater owners, especially smaller, independent operations. Suppose Sony spends millions on a new Men in Black film they know was a stinker; instead of letting it bomb, they could package it with other movies, forcing theaters to screen the crappy sequel even if no one’s buying tickets. What’s worse, distributors could sell these blocks sight unseen, denying theater owners the chance to determine which films they put up on their screens.

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Even smaller studios could be impacted. If A24, for example, notices that Disney and Sony are gobbling up all the screens, they may not produce as many features for fear of not having anywhere to show them. That not only impacts A24’s potential business, but moviegoers’ options at the cinema.
This gets even more distressing when you consider how companies like Disney are conglomerating properties. The studio is already limiting which classic Fox films independent venues are allowed to show, locking movies once widely available for special events or festivals in the Disney Vault. Imagine what could happen if they suddenly had control over which theaters get the latest Fox Searchlight release instead of the next entry in the Marvel Cinematic Universe? Martin Scorsese should be quivering in his square-rimmed glasses.

The Department of Justice’s top antitrust official, Makan Delrahim, said in a statement, “It is our hope that the termination of the Paramount decrees clears the way for consumer-friendly innovation.” He added, “antitrust enforcers remain ready to act” should distributors take untoward advantage of consumers once the rules disappear. Of course, giant corporations and government agencies don’t have a grand history of keeping the little folks as their top priority, so that’s not terribly reassuring.
Even if the DOJ does file its motion in the coming days as expected, there will be “a two-year sunset period for parts of the decrees that address block booking and certain movie licensing practices for theaters in a specific geographic circuits.” Hopefully, that gives independent theater operators a chance to figure out a way out of this mess.

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