We've Got Hollywood Covered

Justice Department Formally Files Motion to Terminate Paramount Decrees

DoJ’s Makan Delrahim announced on Monday plans to end 1948 ruling

The Department of Justice formally filed a motion in federal court in the Southern District of New York Friday to terminate what’s commonly known as the Paramount consent decrees, the rulings that ended the studio system of Old Hollywood in 1948.

The rulings placed restrictions on studios owning movie theater chains and limited practices in distribution known as “block booking” and “circuit dealing.”

“The Paramount decrees long ago ended the horizontal conspiracy among movie companies in the 1930s and ’40s and undid the effects of that conspiracy on the marketplace,” assistant attorney general Makan Delrahim of the Justice Department’s antitrust division said in a statement. “The Division has concluded that these decrees have served their purpose, and their continued existence may actually harm American consumers by standing in the way of innovative business models for the exhibition of America’s great creative films.”

The DoJ announced a review of 1,300 legacy antitrust judgments in August 2018, including a review of the Paramount decrees, and opened a 60-day public comment period. Hollywood organizations like the National Association of Theater Owners and the Writers Guild of America West weighed in with their defenses of why the decrees were still necessary. After Delrahim announced on Monday plans to terminate the decrees, the organizations said they stood by their initial public comments and would respond further after the DoJ formally filed its motion in court.

“NATO submitted comments to the Department previously and we stand by those comments. We will wait to review any actual motion the Department may file in court before commenting further,” NATO said in a statement to TheWrap in response to Delrahim’s speech. “If exhibitors were forced to book out the vast majority of their screens on major studio films for most of the year, this would leave little to no room for important films from smaller studios,” NATO argued in its public comments.

In his speech Monday, Delrahim cited the impact of streaming technology and MoviePass as reasons as to how the movie industry has dramatically changed since the 1940s and that the “horizontal conspiracy” that originally prompted the decrees has been stopped, with no studio owning a significant number of theaters or a theater chain.

However, the DoJ recommended a two year sunset period on block booking and circuit dealing as a ways of allowing theaters and studios to adjust to the changes. It further clarified that lifting the decrees does not mean that such practices would suddenly be legal or insulated from antitrust scrutiny.