The People vs. Paramount Pictures: Should the Long-standing Ruling be Overturned?

In 1948 the Supreme Court of the United States passed down a landmark ruling on an antitrust case that changed the landscape of how movies were distributed to theaters around the world. Once upon a time, many of the studios owned and operated their own movie theaters, allowing them to make and distribute the films as they wanted; but United States v. Paramount Pictures, Inc. changed all that. The result was a busting up of what, at the time, was a monopoly on entertainment and a freeing up of content that allowed new businesses to thrive. But that was 62 years ago and a lot has changed in that 62 years. In 1948 the only way to watch a movie was to … go to the movies. This ruling predated the Internet and Video on Demand. It predated video and DVD. It predated cable television. It predated UHF television. It actually predated readily available television! This is a ruling from the era of single-screen theaters that had two showings a day of one film in all but the major cities (which sported 24-hour single-screen theaters. Zounds!) In other words, this landmark ruling that changed the landscape of the business has remained intact even though the landscape itself has changed beyond recognition.

The idea of the studios not being able to own their own theater chains is an outdated concept that should be challenged and overturned, something producer Joe Roth opined at the Digital Hollywood Conference a few weeks back. Roth's beef stems from a collective boycott by a number of theater chains against his film, the runaway hit Alice in Wonderland, because they were upset with the 12-week window between their scheduled release of the film and its appearance on Blu-ray and DVD. And while that time may look short on paper, remember that Alice in Wonderland appeared in theaters on March 5 and the DVD release is still a month away.

What was wrong with Disney capitalizing upon a strong marketing campaign and cinching up the release time to take advantage of the interest and awareness in the film? Theater chains were afraid the close DVD date would keep people at home, waiting for the seemingly immediate home-viewing release. Meanwhile, 20th Century Fox was fuming because the distributors haven't invested as much money as Fox would like into digital 3-D projectors and pure silver screens, meaning that distributors picking up Alice in Wonderland had to dump Avatar while it was still making buckets of money for Fox. While these decisions may have been in the best interest of the theater chains, in both cases they were decidedly hurtful to the studios -- who, because of the ruling, don't have the recourse of opening their own theater in which to show the films themselves.

Make no mistake, the United States v. Paramount Pictures, Inc. ruling may have freed up competition in the industry 60 years ago, but now, with complicated distribution deals, the studios are finding it harder and harder to release the films in the manner they please -- making it harder for consumers to get what they want, when they want it. Right now the theaters are guaranteed a certain window of time, usually 20 weeks, to exhibit a film before its release on DVD. After a certain number of weeks, the film is available for limited viewing on airplanes and in hotels. Then, after five months, it appears on DVD for purchase -- but now lucrative deals with Redbox and Netflix, coupled with the demise of video stores, is setting up a distribution plan that will only allow you to buy a movie for the first 28 days after release; renting it is not an optionu until the end of that window. Forty-five to 90 days after the DVD release, you can watch it On Demand and finally on cable, then network television gets their shot.

At this point I have to wonder, where is the lack of competition if the studios open their own competing chains? In the age of such widespread distribution, digital advertising, and a large spate of competing content -- including the vast proliferation of independently produced as well as foreign content -- one has to wonder what harm comes from allowing the studios to run their own movie houses. One should assume that movie theater chains benefit from location, amenities, and customer loyalty and not exclusively from the content they carry. If, however, it is the content, how does anyone but the chains benefit from a state-mandated law middleman?