DOJ To Review Rules Governing How Studios Distribute Films To Theaters

The Justice Department said it will review the Paramount Consent Decrees that have governed how studios distribute films to movie theaters for the last 70 years.

The DOJ announced this spring that it would begin examining older antitrust decisions to identify those that no longer protect competition. Antitrust Division chief Makan Delrahim initiated the review because these legacy decrees are open-ended.

In the case of the Paramount Decrees, the same rules have been on the books since a 1948 Supreme Court decision. Vestiges of the old system can still be seen across the country — in Westwood Village, ancestral home of single-screen movie palaces, the Village theater is still topped by a “Fox” sign left over from the studio’s days controlling the theater. (Regency now owns it.)

The decree’s regulations ban various practices, such as block booking (bundling multiple films into a single theater license), circuit dealing (entering into one license that covered all theaters in a circuit) resale price maintenance (setting minimum prices on movie tickets) or overboard clearances (exclusive film licenses for specific geographic areas). As a result, distributors looking to “clear” high-revenue areas of major metropolitan areas had to redouble their selling efforts, though in recent years the system of clearances has started to erode.

“Much has changed in the motion picture industry since that time,” Delrahim said in a statement. “It is high time that these and other legacy judgments are examined to determine whether they still serve to protect competition. Today, we take an important step forward in the process of reviewing the Paramount Decrees.”

There’s no question the motion picture industry has undergone substantial change over the last century. The movie palaces of the 1930s and 40s that would screen one movie at a time have been replaced by megaplexes. Advances in technology mean viewers don’t even need to leave their couches to watch a film — they can just stream it via the internet, or drop a DVD into a home player.

The DOJ will determine whether the decrees should be modified, or abolished altogether, to reflect this changed environment.