U.S. to scrap film regulations

Competition makes antitrust rules obsolete, officials say

The so-called Paramount decrees — the regulations that have governed Hollywood since the heyday of Marilyn Monroe — are taking their final bow.

The U.S. Justice Department is poised to throw out the longstanding consent decrees, which lay out rules for the distribution and exhibition of motion pictures, as part of the department’s broader effort to scrap regulations it views as obsolete.

The decrees, a series of settlements entered between 1948 and 1952, made sweeping changes in the movie industry by breaking up Hollywood’s monopoly on production, distribution and exhibition. Those settlements followed a landmark Supreme Court case in which the justices found the studios had illegally conspired to fix prices and monopolize the distribution and theatrical markets.

Makan Delrahim, the Justice Department’s top antitrust official, signaled the department’s intentions during Monday remarks at an American Bar Association conference in Washington, D.C.

“As the movie industry goes through more changes with technological innovation, with new streaming businesses and new business models, it is our hope that the termination of the Paramount decrees clears the way for consumer-friendly innovation,” Delrahim said, according to a transcript of his prepared speech.

The department opened its review of the film business regulations in August 2018, suggesting that rules were antiquated. When the regulations were enacted, movie theaters generally had a single screen that could be dominated by one studio in a geographic area. Today, many cities have multiple competing cineplexes with multiple screens populated by movies from every studio, and consumers now have more choices when it comes to entertainment.

The review still raised concerns among smaller theater owners. In comments sent to the Justice Department, the National Association of Theatre Owners, which represents members, said its members could be harmed by killing certain regulations — particularly the rule that studios cannot require independent theater owners to book multiple films sight unseen.

“Abandoning the prohibition on block booking will likely reduce competition and incentivize anti-competitive behavior,” the organization said in its comments during the Justice Department’s public review.

However, the impact of the impending changes may not be as big as it appears. The rules apply only to studios that were originally sued by the department in the original antitrust cases, according to legal experts. Walt Disney Co., currently the industry’s dominant studio, was not a party to the litigation or the resulting settlements, for example.

Companies including Netflix, Apple and Amazon, which are now big players in film, didn’t exist at the time, and therefore aren’t affected.

The best-known outcome of the Paramount decrees was the breaking up of movie studios and theaters, followed by a prohibition on some major studios owning cinemas.

However, the ban on studios owning theaters eventually thawed. In the early 1980s, Columbia Pictures — now a division of Sony Pictures — acquired a minority stake in the Walter Reade Organization, which operated theaters in New York and New Jersey. Disney has owned Hollywood’s El Capitan for years. Netflix is still in the process of acquiring the famed Egyptian Theatre on Hollywood Boulevard from American Cinematheque, and has already started exhibiting its movies there, including Martin Scorsese’s The Irishman.