What are known as the “Paramount Consent Decrees” have governed the manner in which film studios have distributed films to movie theaters for 70 years. But that might change as part of a further deregulatory effort by the current administration. Indeed, the Department of Justice reportedly is reviewing the decrees.
The Paramount Consent Decrees emerged from a significant antitrust cased brought by the DOJ against Paramount Pictures, Warner Brothers, MGM, RKO Pictures, 20th Century Fox, and some other film studios. When the DOJ pursued this case in the 1940s, the film studios controlled many aspects of filmmaking. This included not only film production itself, but also long-term contracts with actors and the owning of movie theaters. The DOJ argued at the time that this made it extremely difficult for independent companies to compete.
The case ultimately went to the U.S. Supreme Court in 1948. In U.S. v. Paramount Pictures, Inc., the High Court indicated that a proper remedy would include the cessation by film studios of ownership of movie theaters.
While the decision also was important in ending the hold that movie studios had over talent, and while it indicated that divestment of movie theater ownership was an appropriate remedy, the Supreme Court also reasoned that there did not need to be a ban of such ownership as long as theater ownership by the five major film studios was not otherwise prohibited.
Ultimately, the case was remanded back to the federal trial court, and after more litigation, there was a settlement that resulted in the decrees. And even though the decrees do not explicitly bar major film studios from owning movie theaters, the decrees do ban certain film distribution practices, including block booking, circuit dealing, resale price maintenance, and the granting of over-broad clearances.
According to the HollywoodReporter.com, Makan Delrahim, the head of the DOJ Antitrust Division, has stated recently: “The Paramount Decrees have been on the books with no sunset provisions since 1949. Much has changed in the motion picture industry since that time.” Thus, the DOJ reportedly is going to review the decrees afresh.
As part of this review, the DOJ reportedly is contemplating the current context in which many more cities have movie theaters and there are many more screens in theaters. Furthermore, viewers are not confined any longer to watching movies in theaters. Indeed, it is understood that new technology allows for the watching of movies in various other ways — streaming on smart TVs, computers, and phones. And there now are companies like Netflix that are producing and distributing their own content.
The DOJ announcement that it plans to review the Paramount Decrees reportedly as part of a wider effort to take a new look at stipulated settlements in which companies consented to alter their practices to avert antitrust litigation and potential remedies.
It is not clear now what is going to happen as a result of the DOJ’s review of the Paramount Decrees. Any real changes likely would need the approval of the parties and a court order. Stay tuned.
Eric Sinrod (@EricSinrod on Twitter) is a partner in the San Francisco office of Duane Morris LLP, where he focuses on litigation matters of various types, including information technology and intellectual property disputes. You can read his professional biography here. To receive a weekly email link to Mr. Sinrod’s columns, please email him at firstname.lastname@example.org with Subscribe in the Subject line. This column is prepared and published for informational purposes only and should not be construed as legal advice. The views expressed in this column are those of the author and do not necessarily reflect the views of the author’s law firm or its individual partners.