Justice Department to Review 70-Year-Old Rules That Barred Major Studios From Owning Theaters

Antitrust rules had been in place since landmark 1948 Supreme Court decision

Last Updated: August 2, 2018 @ 4:32 PM

The Department of Justice announced Thursday that it is reviewing the rules that have guided distribution deals between Hollywood studios and movie theaters chains for the last 70 years.

The current rules, known as consent decrees, have been in place since a landmark Supreme Court case in 1948 ruled in favor of the DOJ in their antitrust suit against Paramount Pictures. The ruling outlawed “block booking,” which required theaters to screen several B-Movies from a studio in order to be licensed to screen the most in-demand releases.

The SCOTUS ruling also forced studios to sell their ownership stake in movie theaters, signaling the end of the movie palace era and the studio system that dominated the Golden Age of Hollywood. The ruling has also since been used as precedent for media antitrust cases, particularly involving vertical mergers.

But Makan Delrahim, who was appointed Assistant Attorney General for the DOJ’s Antitrust Division last year by President Donald Trump, said the rules need to be reviewed as the landscape of the exhibitor industry has changed from largely single-screen theaters in the 1940s to nationwide multiplex chains today.

“The Paramount Decrees have been on the books with no sunset provisions since 1949. Much has changed in the motion picture industry since that time,” Delrahim said in a statement. “It is high time that these and other legacy judgments are examined to determine whether they still serve to protect competition.”

A spokesperson for the Motion Picture Association of America told TheWrap it is aware of the DOJ’s decision but have no comment at this time. The National Alliance of Theater Owners also declined comment.