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Why The DOJ Is Concerning Itself With The Old Anti-Trust Paramount Consent Decrees


And now the story of a Hollywood ending of a different kind. Last month, the Department of Justice moved to end the Paramount Consent Decrees. They are a landmark 1948 anti-trust agreement that governed the relationship between Hollywood studios and movie theaters.

Alexi Horowitz-Ghazi from our Planet Money team explains why the Justice Department is concerning itself with this old antitrust rule and what it might mean for the silver screen.

ALEXI HOROWITZ-GHAZI, BYLINE: In the spring of 2018, the antitrust division of the DOJ announced it would begin a bit of legal housekeeping - clearing the cobwebs, they called it. Basically, through the 1970s, many federal anti-trust agreements were perpetual. They never ended. Thus, the DOJ explained, it would review nearly 1,300 judgments going back over 100 years to evaluate whether they're still in the public interest. Those included antiquated sounding settlements aimed at curbing monopoly power over music roles for piano players and hoof pads for horseshoes.

But the Paramount Consent Decrees, they've affected everyone who's gone to a movie theater in the U.S. in the last 70 years. The decrees go back to the golden age of Hollywood in the 1930s and '40s.


UNIDENTIFIED PERSON: (Singing, unintelligible).

HOROWITZ-GHAZI: Back then, Hollywood studios controlled pretty much every aspect of the film industry.

BEN FRITZ: They had contracts with the actors. So if you were an actor, the movie studio essentially owned you. And then they owned the theaters. So they owned everything from the talent all the way through to the screens where people watched the movies. It was sort of an end-to-end, vertically integrated industry.

HOROWITZ-GHAZI: Ben Fritz is the author of "The Big Picture: The Fight For The Future Of Movies." He says that in the late 1930s, the DOJ sued the big Hollywood studios for stifling competition by offering exclusive deals to particular theaters and through a practice called block booking.

FRITZ: What that means is that the studio would say to the theater, OK, you want to play this really popular film. You also are required to play all of our other films, which you may or may not want.

HOROWITZ-GHAZI: In 1948, when the Supreme Court ruled against the studios, it effectively ended their direct ownership of theaters and block booking, opening the market to independent theaters.

FRITZ: After the Paramount settlement in the late '40s, there was an explosion in the number of movie theaters in America. It grew significantly over the '50s, '60s, '70s.

HOROWITZ-GHAZI: And now there are countless other ways to watch movies - on TV or on your phone. There are screens pretty much everywhere, which is why the DOJ argues the Paramount decrees aren't needed anymore. Author Ben Fritz says that while streaming and TV have created more competition, the move could still hurt some in the film world.

FRITZ: Well, the biggest losers are most likely going to be independent theaters.

RANDY HESTER: We're not panicking, but we are concerned because we know what these practices can do.

HOROWITZ-GHAZI: Randy Hester is the president of Hometown Cinemas, a small theater chain in Texas, and on the board of the Independent Cinema Alliance. Hester worries ending the Paramount decrees could reopen the door to studio control over which films he's able to book, potentially threatening his bottom line.

HESTER: To the Department of Justice, it's just a consent decree that's been on the book for 70 years. And they say, ah, we don't need that. Throw it out. But this is our livelihood. This is our life. And I'm speaking for thousands of independent theater owners across the country.

HOROWITZ-GHAZI: Ending the decrees could affect independent film, too, says Josh Welsh. He's president of Film Independent, a nonprofit that supports independent filmmaking.

JOSH WELSH: If you love films that are not just pumped out by a studio machine, you really should care about this because it's going to result in less choice for consumers and fewer opportunities for independent filmmakers to get their work out into the world.

HOROWITZ-GHAZI: The DOJ's antitrust division, for its part, said it would phase out the Paramount decrees over two years and will continue to monitor the market closely for anti-competitive practices. They're committed to finally bringing a sunset clause to Sunset Boulevard.

Alexi Horowitz-Ghazi, NPR News.

(SOUNDBITE OF MUSIC) Transcript provided by NPR, Copyright NPR.

Alexi Horowitz-Ghazi is a host and reporter for Planet Money, telling stories that creatively explore and explain the workings of the global economy. He's a sucker for a good supply chain mystery — from toilet paper to foster puppies to specialty pastas. He's drawn to tales of unintended consequences, like the time a well-intentioned chemistry professor unwittingly helped unleash a global market for synthetic drugs, or what happened when the U.S. Patent Office started granting patents on human genes. And he's always on the lookout for economic principles at work in unexpected places, like the tactics comedians use to protect their intellectual property (a.k.a. jokes).