Reconsidering the Consent Decrees

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In Focus

During the 1940s, the Supreme Court of the United States reviewed anti-competitive doings in the motion picture industry. The major Hollywood studios controlled almost every aspect of the movie industry. One of their most disturbing practices was their effort to quash independents. Certain policies such as block booking and overbroad clearances were reviewed and condemned by the Court and eventually led to the ruling that became known as the Paramount Consent Degrees in 1948.

The Court decided the most sensible fix was forcing the studios to divest themselves of cinemas. But their decision stopped short of forever banning them from theatre ownership.

Last month, the government decided to review the Paramount Consent Decrees. While the Department of Justice may very well end the Decrees, it still cannot overrule the Supreme Court. Overbroad clearances, block blocking and other banned practices could easily lead to lawsuits. But what was once considered unfair in another time may be perceived as pro-competitive in the current climate.

It is not uncommon for the larger exhibitors to demand exclusivity in certain geographic areas of the country. Since only overbroad clearances were deemed unacceptable under the Paramount Consent Decrees, exhibitors and distributors have negotiated more modest clearance agreements in recent years. These pacts have led to Justice Department investigations as well as lawsuits from unhappy independents.

A Texas federal judge has put in play what could be the first jury trial looking into the relationship between theatres and studios since the landmark 1948 Court decision. Soon after the DOJ decided to review the Consent Decrees, a U.S. District Court rejected AMC's bid for a summary judgment in a lawsuit that alleges the leading cinema circuit colluded with Sony, Disney and Universal to the detriment of an independent theatre owner in Houston, Viva Cinemas.

AMC made clearance pacts for exclusivity on first-run films in Viva’s territory. While overbroad clearances are illegal as stated in the Paramount case, the court noted that Viva could not cite a single case in which clearances have been deemed illegal since that time.

The judge concluded that a rule-of-reason analysis is needed under antitrust law. To prove a violation of the Sherman Act, Viva would have to show that AMC and the studios united in a conspiracy to restrain trade.

The judge stated, “Though the Court agrees with AMC that such evidence of horizontal agreements is precarious, screening out marginal cases is not an appropriate use of this Court’s summary judgment function. Based on the evidence, the court cannot say a reasonable juror could not find the existence of horizontal agreements between the suppliers.”

If we assume that the Consent Decrees restrained the industry from excessively unfair pacts, what will happen if they are struck down? Will the studios begin flexing their muscles and seeing what they can get away with under antitrust laws? It’s just a matter of time before we know.

The Heart of Show Business

Show-business people are kind, generous and philanthropic. And the motion picture industry epitomizes this goodness. Time and time again, we witness the generosity of an industry that most definitely “pays it forward” There are a number of entertainment-based charities that have different missions but share the common element of doing good and helping the less fortunate.

In the October edition of Film Journal International, correspondent Bob Gibbons interviewed four of the top executives from the industry’s premier charities, including Variety—The Children's Charity, the Will Rogers Motion Pictures Pioneers Foundation, Lollipop Theater Network and the St. Jude Children's Research Hospital. Each organization is unique in its mission, with executives who are committed to their cause.

Todd Vradenburg, executive director of Will Rogers, states that the motion picture industry has not only created that charity but has sustained it for 80 years. Stan Reynolds, international vice president of Variety, emphasizes that Variety is a great family of people who care. Evelyn Iocolano, executive director of Lollipop, says that Lollipop is about lifting the spirits of the patients and families they serve by using movies and entertainment to provide an escape from what is otherwise a very stressful time in their lives. And Richard Shadyac, Jr., president of St. Jude, explains that their mission is to discover how to save the lives of children with cancer and other life-threatening diseases while ensuring that no family ever gets a bill from the hospital.

This industry is very proud of their prestigious institutions, and despite the competitive nature of the business, when a child or pioneer in the industry is in need, everyone bands together to make certain that person is well cared for and treated. That is why we are the Heart of Show Business.