DOJ Looking to End 1940s-Era Theatrical Movie Distribution Rules

The Department of Justice’s antitrust division is considering ending 1940s-era legislation that prohibits studios from owning movie theaters and controlling the exhibitor release slate, among other provisions.

Known as the Paramount decrees, antitrust efforts at the time led to the 1948 U.S. Supreme Court ruling against Paramount Pictures and other major studios that ended studio ownership of theaters and made it illegal for studios to mandate theaters screen all or none of their new releases, a practice known as “block booking.”

“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,” Makan Delrahim, the DOJ’s antitrust boss, Nov. 18 told the American Bar Association confab in Washington, D.C.

Delrahim led the Justice Department’s unsuccessful appeal of AT&T’s $85 billion acquisition of Time Warner, which led to the creation of WarnerMedia.

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The DOJ, which would have to file a legal court motion to reverse the law, is seeking a two-year sunset period on several elements of the decrees, including block booking and select license agreements, according to The Wall Street Journal, which first reported the government move.

Observers contend the move could expedite consolidation among the three largest theatrical chains: AMC Theatres, Regal Entertainment and Landmark Holdings, while likely putting smaller exhibitors out of business.

The theatrical business remains under siege by over-the-top video and market domination by Disney, which continues to rule the box office through its Marvel Studios, Pixar Animation and Lucasfilm releases.

Trade group the National Association of Theater Operators suggested a reversal of existing theatrical distribution rules would enable major studios to dominate exhibitor release slates.

“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,” NATO said in a statement.

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