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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