The government may let movie studios own theaters again

Back in 1948, the United States Supreme Court ruled on a case called United States v. Paramount Pictures, Inc. — stay with me, we’re going somewhere with this. The case blew up the movie industry of the time, which was dominated by a few big studios that successfully prevented smaller creators from getting a foothold. The studios could do this because they owned many of the theaters where they showed their movies — obviously, they had little incentive to show anyone else’s stuff. And they controlled independent theaters with practices like block booking, where they forced theaters to take their whole slate of upcoming movies, someone sight unseen. So if Disney, for example, were to engage in block booking, it might only let a theater exhibit The Rise of Skywalker if it also showed the studio’s extensive catalog of Don Knotts movies:

I mean, not really; block booking is more about foisting a bunch of new movies on theaters that necessarily crowds out any competitors from other studios. But it’s nice to remind people that Disney was going really hard in on Don Knotts back in the ’70s.

Anyway, the court order — known as the Paramount Decrees — put an end to those practices. Studios could no longer own theaters, and practices like block booking were banned. But now, Variety reports that the US Department of Justice wants to put an end to the Paramount Decrees, with antitrust division head Makan Delrahim laying out his reasoning in a speech. “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,” Delrahim said. “The Division finds the consent decrees no longer meet consumer interests.”

Delrahim argued that the Decrees don’t really do anything useful in an age where studios can connect to their audiences directing through streaming services, and may be standing in the way of “consumer-enhancing innovation.” Now, just so we’re clear, this doesn’t mean that block booking and vertical integration of theaters is suddenly legal, just that it’ll be covered by normal antitrust law and prosecuted when and if it happens, rather than being banned outright by the Decrees. We’re watching you, Disney.

So are groups like the National Association of Theatre Owners, which are urging the DoJ to at least retain the ban on block booking. “If exhibitors were forced to book out the vast majority of their screens on major studio films for most of the year, this would leave little to no room for important films from smaller studios,” the group said in a statement, pointing to the success of smaller movies like RGB and Won’t You Be My Neighbor? that may have been crowded out with the protections of the Decrees. “Preserving the prohibition on block booking is vital to the ability of all distributors, both large and small, to bring their movies to the big screen and reap the benefits of a theatrical run.”

I’ve mentioned Disney a couple of times here because they’re the biggest, most powerful studio around and seem like they could most benefit from some of the anti-competitive strategies addressed by the Paramount Decrees. There’s no guarantee this is going to lead t some kind of movie apocalypse or anything, but I don’t quite get Delrahim’s reasoning. Like, okay, sure, creators can reach audiences more directly through streaming services these days. But what does that have to do with theaters potentially being harmed by a resurgence in block booking?

The DoJ plans to ask a court to terminate the Decrees, with a two-year delay so theaters can adjust. We’ll see how it goes.

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h/t The A.V. Club