Regulation

DOJ Seeks To End Ban Of Hollywood Studios Buying Theaters

The U.S. Department of Justice (DOJ) will request the end of a ban that prohibits Hollywood studios from owning movie theaters.

The 70-year-old antitrust settlement, known as the Paramount Consent Decrees, no longer serves the public interest. In a speech on Monday (Nov. 18), Makan Delrahim, head of the DOJ’s antitrust division, said they are now irrelevant because of streaming services like Netflix, according to Bloomberg.

“As the movie industry goes through more changes with technological innovation, with new streaming businesses and new business models, it is our hope that the termination of the Paramount decrees clears the way for consumer-friendly innovation,” said Delrahim.

Created in 1948, the Paramount Consent Decrees came at a time when television wasn’t as popular, and theaters were the go-to for entertainment in America. The regulation prohibited selling films in groups, which allowed studios to force theaters to show less-desirable films by linking them to more popular releases. It also banned the setting of minimum prices on movie tickets, as well as giving exclusive film licenses for specific regions.

AMC, Cinemark and Regal are currently the biggest theater operators in the United States. While the move could make the takeover of a chain more likely, analysts pointed out that most of the major Hollywood studios are focusing more on the growing streaming services market. In addition to Netflix, services Amazon, Hulu, Apple and Disney have launched their own streaming services.

“I don’t know if it makes sense for a major studio to buy a top chain,” said Amine Bensaid, an analyst at Bloomberg Intelligence. “Yes, it would help with margins (as they don’t have to share about half of sales with theaters), but as the world continues to shift [toward] streaming, top studios are probably already thinking about moving some of their smaller productions directly to streaming.”

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