A change in US law is rewrit­ing Hollywood’s playbook

In a land­mark deci­sion from the US Depart­ment of Jus­tice yes­ter­day, the antitrust divi­sion ruled to ter­mi­nate the Para­mount Decrees, the set of pre­cepts that have essen­tial­ly deter­mined the course of the enter­tain­ment indus­try over the last 80 or so years.

Even for those not tuned into the tick­er feed of updates from the busi­ness side of Hol­ly­wood, this is a sig­nif­i­cant sto­ry worth fol­low­ing, a major shift in pol­i­cy that could very well have ram­i­fi­ca­tions for the aver­age movie­go­er and soon.

Once upon a time in the so-called Gold­en Age of Amer­i­can film­mak­ing, stu­dios ran the movie biz with a ver­ti­cal­ly inte­grat­ed iron fist. Mega­cor­po­ra­tions like MGM, Uni­ver­sal, and Para­mount owned not only their mas­sive pro­duc­tion com­pa­nies, but the chains of the­aters that would show them as well, lead­ing to unsa­vory and monop­o­lis­tic practices.

Most fre­quent­ly cit­ed is the strat­e­gy of ​“block book­ing,” in which a stu­dio would only license its big mon­ey-mak­ers for exhi­bi­tion if the the­ater agreed to show a few clunk­ers as well. The oth­er threat to the free mar­ket was ​“cir­cuit deal­ing,” in which a stu­dio nego­ti­ates with all the­aters in a phys­i­cal region at once. Both tac­tics lim­it the space in which brick-and-mor­tar the­aters can suc­ceed by mak­ing them behold­en to the whims of the stu­dios con­trol­ling their fates.

But in 1948, the Supreme Court presided over the game-chang­ing case Unit­ed States vs. Para­mount Pic­tures Inc. and hand­ed down a new sta­tus quo that stu­dios would not be per­mit­ted to oper­ate their own the­aters. Ever since, there’s been a sep­a­ra­tion of church and state, leav­ing your local cine­plex free to show films from Sony, Dis­ney, art­house bou­tiques, or who­ev­er else they please.

That will soon come to an end, in light of a new devel­op­ment out­lined by The Hol­ly­wood Reporter (though the announce­ment from the Depart­ment of Jus­tice still pends court approval). After a ​“two-year sun­set peri­od” giv­ing the indus­try time to adjust, both block book­ing and cir­cuit deal­ing will be once again fair game.

One might won­der why the gov­ern­ment would want to dereg­u­late an indus­try already inch­ing towards the hoard­ing of pow­er by a small hand­ful of super­pow­ers. Here’s Makan Del­rahim, the Assis­tant Attor­ney Gen­er­al appoint­ed by the Amer­i­can Pres­i­dent Don­ald Trump, explain­ing his rea­son­ing: “[The Para­mount Decrees] have already reme­died the effects of the vio­la­tion, rid­ding the indus­try of ​‘all taint’ of the hor­i­zon­tal con­spir­a­cy and undo­ing what the con­spir­a­cy had achieved.” In clas­si­cal­ly Trumpian fash­ion, the quote marks around ​“all taint” have been placed there for no dis­cernible reason.

This is a demon­stra­bly false claim, as the twin titans of Dis­ney and Net­flix have made clear over the past few years, but dereg­u­la­tion is the name of the game in the cur­rent admin­is­tra­tion. And just as peo­ple were prompt­ly made sick by the let­tuce the FDA fig­ured didn’t need inspect­ing, ordi­nary con­sumers may soon expe­ri­ence the con­se­quences of this policy.

This won’t make much of a dif­fer­ence to the gar­gan­tu­an the­ater chains like AMC, which can afford to play ball with the stu­dios and hard­ly both­er with small­er fare any­how. The real losers of this shake-up will be hum­bler oper­a­tions, the mom-and-pop the­aters that won’t be able to get mon­ey-mak­ers like Toy Sto­ry 4 with­out screen­ing any attached remoras as well.

Prop­er art­hous­es will also feel the sting. Those cin­e­mas uncon­cerned with the lat­est Mar­vel extrav­a­gan­za still deal with Sony, Dis­ney, and their ilk when get­ting well-regard­ed titles from spe­cial­ty releas­ing arms like Sony Pic­tures Clas­sics or Fox Search­light. Under block book­ing, art­hous­es try­ing to show Call Me By Your Name in 2017 would have been forced to have con­ver­sa­tions about show­ing The Emo­ji Movie along with it.

Fur­ther­more, these prac­tices make it nigh-impos­si­ble for an inde­pen­dent dis­trib­u­tor to get any real trac­tion in the main­stream. Con­sid­er the suc­cess sto­ry of A24’s roll­out of Mid­som­mar, even­tu­al­ly reach­ing upwards of 1000 the­aters with the help of chain mul­ti­plex­es; with those movie hous­es ink­ing con­tracts under stu­dio terms, this would not have been permitted.

In all, while these shifts in pro­to­col pro­mote them­selves as an increase in free­dom for those in a com­pet­i­tive mar­ket­place, that couldn’t be far­ther from the truth. At a time when the gov­ern­ment should be begin­ning the mas­sive labor of break­ing up behe­mots such as Ama­zon and Dis­ney, they’re doing the exact oppo­site and paving the path towards even more rapid, uncon­trolled growth. Quick, some­one ask Mar­tin Scors­ese where he stands on block booking!