The Justice Department is moving to phase out the consent decrees put in place in the wake of the 1948 Paramount Pictures anti-trust ruling, Slashfilm reports. (Also reported in Gizmodo and the Wall Street Journal (paywalled).) These decrees forced movie studios to divest themselves of their movie theater holdings, and put restrictions on how they were allowed to offer movies to theaters—irreversibly shaping the growth of the movie theater industry that followed. I’ll look at what this change might mean for modern media—and whether it might have implications for e-books as well.
I touched on the Paramount matter a couple of years ago, when I remarked on how streaming services were moving to buy up content and turn it into exclusive shows for themselves, and movie studios were moving to start their own streaming services. I ended that piece with:
[M]ovie studios and their theater chains had been in operation for several decades at the time the government suddenly stepped in to break them up in 1948. Suddenly, “the way it’s always been” was no longer legal. And the same thing holds true even now: legal thinking might have changed from how it was in those days, but nothing says it couldn’t change back if enough people start seeing actual harm—and if that happens, just because things had been that way for decades won’t confer immunity to the new necessity of sudden change.
I seem to have been a little too optimistic. Rather than moving toward returning to those days, the Justice Department is now shedding another last vestige of them.
While voices in the movie industry have been expressing alarm at this change, in a way it’s been inevitable since the 1970s. That decade saw the Justice Department’s move to the new “consumer welfare” standard for anti-trust enforcement, which opened the way for conglomerates like Amazon, Google, and the major movie studios to grow beyond limits that would once have required their break-up. It also saw the introduction of the VCR, which created the home video industry that in its turn spawned video streaming services.
Perhaps more than any physical home video medium, streaming services have killed home video stores, and turned movie theaters into also-rans. There might be too many of them for anyone to want to subscribe to them all, but even just one of them will provide access to more content than the average video store, and a lot more content than a movie theater. And movie theaters have been desperate enough to do almost anything to lure more people in. So, from that perspective, perhaps it’s not surprising that they’d seek to get those consent decrees thrown out so movie theaters can act more like streaming services.
It’s tempting to view this decision as yet another pro-big-business excess of the Trump administration, but I don’t think that tells the whole story. Three Democratic Presidents have had five terms among them since the Justice Department first changed its anti-trust practices, but I never saw any of those administrations try to roll back those changes. This is just how our anti-trust law has evolved, and we’re starting to see some of the more dramatic consequences of that evolution.
Slashfilm suggests that the move could have troubling implications for smaller theaters if studios start requiring them to show particular movies in order to be able to screen others—though just how far the studios will go in that regard remains to be seen. That being said, the move also means that streaming services like Netflix could buy or build chains of theaters themselves, and bypass the difficulties they’ve been having placing their original movies into theatrical chains.
As for the implications for e-books, perhaps there are none directly. But the biggest indirect one is that it bodes well for big e-book-publishing companies like Amazon to continue to have their own way, using their immense size and marketing power to their own benefit. The Justice Department is getting ready to undo the consent decrees that broke up the major movie studios back in the day—so how likely is that Justice Department to want to step in and break up Amazon?
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Just a quick little set of observations.
Being late Gen X I grew up watching innovation destroy status quo. I’ve yet to see a single mandated breakup (since the 70s) that ultimately helped the consumers. There are occasional stoppages that are worth while; but rarely does breaking up a company help anyone.
The Bell breakup may have had a short term effect but technology (VoIP) would have rendered the same results a decade later without the fraud and deception that came in the wake of the bell dissection.
The point of the cable breakups was to increase competition. We never did get per channel. And today streaming has regulated cable and satellite to an “also”.
They wanted to break up Microsoft. Now there are calls to break up Amazon.
Most of these calls come from pocketbook politicians on behalf of inferior competitors who refuse to innovate. The publishers vs amazon. Ups vs Usps vs amazon vs uship.
Breakups don’t lower prices in the long run. They do nothing for the callers who can’t compete anyway.
A few loud people clammed for choice. The majority don’t change at all even with breakups.
The majority will always choose conveyance over choices. I can drive around town all day shopping or spend 10 minutes on Amazon. I can sift and sort through a repository or download from an App Store. I can spend an hour searching a library catalog or fire up the stream for a movie.
Consolidation tends to be what consumers want. As history shows. Even when it’s not what they say.
As a final not: polls are terrible. If a poll ever asked a real consumer question….
Would you rather have 5 stores with similar or identical items; or one store and a 10% premium for convenience?
I’d put money on the latter.
There has been one notable exception to the consumer harm standard in the recent past. The proposed merger between Office Depot and Staples was not blocked because of its consumer impact; the court ruled that big box stores and Amazon were sufficient competition there. It was blocked because of its impact on sales to businesses, especially small businesses.
But that was during the Obama administration. It probably would have flown through the courts now.
I’m not sure there would have been much harm if the locations still existed after the merger. With the Office Max-Depot merger prices generally went down.
At the moment both Staples and Office MD are an oh no destination for when you run out of something and need it now.
A merger would have allowed for even more volume, equalling discounts for the company and potentially Even lower prices
Why would I otherwise willingly drive to staples to buy a box of staples for $5.99 when I can get them on amazon for $1.99?