Movie Theaters May Never Be the Same After the Paramount Consent Decrees Are Terminated

Wow! After over 70 years, the Paramount Consent Decrees have officially been terminated. A New York federal judge recently granted a motion by the U.S. Department of Justice to bring an end to the movie industry's long-lasting licensing rules.

This is pretty big news, and it’s very possible that the movie theater business will never be the same again. When theaters do open back up, they will be faced with a whole new issue to deal with.

For those of you not familiar with the Paramount Consent Decrees, they have been in effect since the late 1940s. During the golden age of Hollywood, the Justice Department took the major movie studios to court because they felt that they has way too much power over the movie industry. Back then, the studios owned their own movie theaters, and they were able to run them however they wanted. They would mostly just screen their own movies and lock out all of the competition.

THR explains, “The government pursued a major antitrust action against film studios, which in those days, were vertically aligned with national theater chains. As a result of the U.S. Supreme Court's landmark 1948 decision in United 
States v. Paramount Pictures, the studios had to divest themselves of their exhibition holdings. A court-approved settlement then established rules governing the licensing relationship between certain studios such as Paramount and Warner Bros. and theater owners. Other studios such as The Walt Disney Company weren't part of the original case, but have nevertheless been guided by those Paramount Consent Decrees.”

It’s explained that “total bans on practices like ‘block-booking’ (bundling multiple films into one theater license) and ‘circuit dealing’ (the practice of licensing films to all movie theaters under common ownership, as opposed to licensing each film on a theater-by-theater basis) had outlived their usefulness.”

So, with the Paramount Consent Decrees no longer in effect, movie studios can now start building up their own movie theater chains or even buying up existing movie theater chains. They will also be able to run those theaters anyway they want, meaning they don’t have screen films that they don’t want to screen.

U.S. District Court Judge Analisa Torres said in an opinion:

"Given this changing marketplace, the Court finds that it is unlikely that the remaining Defendants would collude to once again limit their film distribution to a select group of theaters in the absence of the Decrees and, finds, therefore, that termination is in the public interest.”

The judge goes on to explain that the way the market has changed over the years is justification for allowing this to happen, saying:

"In today’s landscape, although there may be some geographic areas with only a single one-screen theater, most markets have multiple movie theaters with multiple screens simultaneously showing multiple movies from multiple distributors. There also are many other movie distribution platforms, like television, the internet and DVDs, that did not exist in the 1930s and 40s. Given these significant changes in the market, there is less danger that a block booking licensing agreement would create a barrier to entry that would foreclose independent movie distributors from sufficient access to the market." 

I have no idea what exactly the ramifications of this will be, but it’s certainly going to be fascinating to see how things play out over the next few years with movie theaters and studios.