Justice Department Warns Academy Possible Netflix Rule Changes Could Violate Antitrust Law

Department of Justice sent letter to Academy about proposed rule change restricting eligibility for films without significant theatrical runs

The U.S. Department of Justice has sent a letter to the Academy of Motion Picture Arts and Sciences, warning the organization that it could be in violation of antitrust laws if the Academy decides to change its Oscar eligibility rules.

A spokesman for the DOJ confirmed that the department did recently send a letter to the Academy.

According to a report from Variety, the DOJ’s antitrust chief, Makan Delrahim, wrote to AMPAS CEO Dawn Hudson expressing concerns that potential new rules would be written “in a way that tends to suppress competition.”

It was reported in March that famed “Jaws” and “Jurassic Park” director Steven Spielberg was considering proposing a rule change during April’s Academy Board of Governors’ meeting that would restrict eligibility for films that do not have a significant theatrical run. Spielberg believes the movie theater experience is essential to truly appreciate and reward the art form. He also said he sees anything on Netflix as belonging to the TV medium.

“We’ve received a letter from the Department of Justice and have responded accordingly,” an Academy spokesperson said in a statement. “The Academy’s Board of Governors will meet on April 23 for its annual awards rules meeting, where all branches submit possible updates for consideration.”

Delrahim, Variety reported, cited Section 1 of the Sherman Act, which “prohibits anticompetitive agreements among competitors.” So if the Academy were to adopt a new rule excluding Netflix — or any other competitor — from Oscar eligibility, and if that impacted the sales of the excluded film/films, then the Academy could be in violation of Section 1.

The Academy and many of its members have been at odds with the streaming giant and its theatrical exhibition practices for years.

Spielberg’s comments were seen as a direct attack on Netflix. Such a proposal would likely directly impact the film and TV company, which typically does not release films in theaters. Netflix has, however, released some of its movies in theaters for awards consideration.

Last year Netflix released “Bird Box,” “The Ballad of Buster Scruggs” and Alfonso Cuarón’s “Roma” in theaters for a limited release ahead of their debuts on Netflix. The streamer earned its first best picture Oscar nomination with “Roma,” which garnered a total 10 nominations. “The Ballad of Buster Scruggs” earned three nominations.

The Academy hasn’t said whether it would consider a rule change.

In January Netflix became the first streamer to join the Motion Picture Association of America, Hollywood’s most devoted advocate for major film studios in Washington.

“On behalf of the MPAA and its member companies, I am delighted to welcome Netflix as a partner,” MPAA Chairman and CEO Charles Rivkin said in a statement at the time. “All of our members are committed to pushing the film and television industry forward, in both how we tell stories and how we reach audiences. Adding Netflix will allow us to even more effectively advocate for the global community of creative storytellers, and I look forward to seeing what we can all achieve together.”

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