Theaters have been around for over a little under a hundred and twenty years, with the first one opening in 1905, and the industry only grew from there. Filling the seats required studios to produce captivating films that attracted audiences enough to spend their hard-earned money. This, of course, brought competition between studios that in the ’30s and ’40s saw a group of entertainment companies use their large power and influence over the film industry to control the market. They did this by limiting the largest Hollywood production studios’ ability to own theaters, controlling ticket prices, and by making sure it was their films being played in the theaters. This basically gave them a monopoly over the film industry.
This is where the U.S. Department of Justice stepped in and installed the landmark Paramount Consent Decrees to stop these companies from their abusive practices and promote competition from other independent filmmakers by regulating how movie studios distribute films to movie theaters. These decrees had been around for over seventy years without a sunset provision or termination dates. But at the end of 2019, the Department of Justice announced that they would finally end the Paramount Consent Decrees.
Assistant Attorney General Makan Delrahim for the Justice Department’s Antitrust Division said that, “The Division has concluded that these decrees have served their purpose, and their continued existence may actually harm American consumers by standing in the way of innovative business models for the exhibition of America’s great creative films.”
In the Department of Justice’s announcement to terminate the Decrees, they mention how the film industry has changed over the decades. From the way that business is conducted and significant changes to the industry like technological innovations, new film platforms, new competitors and business models and shifting consumer demand. One example they give is the difference in theaters from then and now. Back in the ’30s, theaters had one screen to show a film. In our day and age theaters have a wide variety of screens where different films from different distributors are shown at the same time.
Then we have the addition of television, DVDs/Blu-rays and streaming services that did not exist when the decrees were entered. It was also mentioned that, in this day and age, it would make no sense for studios to collude to limit their film distribution to a select group of theaters and that some of the business practices that had been prohibited could actually be beneficial.
So how could this affect the film industry now, especially if these decrees are so antiquated? Callie Khouri, who is the Oscar-winning screenwriter of Thelma & Louise and the creator and executive producer of Nashville, has some very interesting thoughts on the dangers of deregulating some of these practices that are supposed to promote competition. She claims that we are already seeing some of the effects of undermining laws and regulations with the Disney/Fox merger. Disney being the massive corporation that it is has increased its market share to further aggressively pursue its franchise strategy while reducing the number of films it produces. It’s brilliant if you think about it. Disney’s films don’t need to compete with Star Wars, Marvel, Fox, and other properties anymore because they bought them all and in that way partially controlling the market and creating an artificial scarcity.
Sure this is great for them, but it affects independent theaters and films greatly. When a blockbuster film like Avengers: Endgame or Star Wars: The Rise of Skywalker is ready to hit theaters, they are able to force theaters by contract to play on a certain number of theaters for a certain length of time or they can choose not to show it at all. This, of course, leaves less room for other smaller independent films that probably won’t get the same amount of promotion or run in theaters because they have to focus on what is going to be filling up their screens, Disney properties.
Also, streaming services, specifically ones like Disney+, HBO Max and Peacock, which are all products of traditional content companies, are permitted by regulators to consolidate horizontally, vertically or both. They are essentially doing what the Paramount Consent Decrees aimed to avoid by merging content companies with distribution channels and thus being able to put up a figurative wall around their content. All this while underpricing and bundling the content with other products, making it more difficult for new independent producers to enter the market. According to Khouri, this will give the few powerful companies the ability to destroy the free markets.
We are living in very interesting times when the art of filmmaking is changing, I mean we just saw Martin Scorsese release one of his films, The Irishman, on Netflix and not in theaters. So although some people like independent cinemas and others could be sounding the alarms, only time will tell what the effects of removing regulations like these will do to the film industry.
But what is for sure is that this is a change that came from the current administration at the White House which is part of a long trend of other irresponsible decisions. The only way this trend can change is if the leadership changes as well, which is why it is so important for everyone who is able to cast their vote in the 2020 election to do so.
If not, then we really don’t have a right to complain about the removal of regulations like these that could be harmful to the film industry. True, we are talking about films here, but if this is what they are doing with our entertainment, what other decrees could they be removing that have served for our protection?
Do you think that the removal of the Paramount Consent Decrees is a good or bad thing? Let us know in the comment section below!
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