Time to revisit the Paramount Consent Decree?

posted by CSWalczak on May 25, 2010 at 3:50 pm

Many readers here on Cinema Treasures are aware of the 1948 Paramount Consent Decree which, in a nutshell, forced the big Hollywood studios of the time to divest themselves of the theater chains they owned, based on the contention that the studios unfairly controlled film distribution. These chains included some, if not most, of the greatest movie palaces ever built.

In a recent piece written for a blog at Film.com, commentator C. Robert Cargill argues that studios should once again be permitted to own theaters outright, pointing out that circumstances have radically changed since 1948 and that competition would now be enhanced not diminished if studios now had their own exhibition outlets.

The idea of the studios not being able to own their own theater chains is an outdated concept that should be challenged and overturned, something producer Joe Roth opined at the Digital Hollywood Conference a few weeks back.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.

The whole essay is here at Film.com.

Comments (11)

Edward Havens
Edward Havens on May 25, 2010 at 5:31 pm

I’m going to post here my comments there, so no one else has to waste their time reading such a bad article…

“There are several problems with your argument, Mr. Cargill…

First, and most importantly, studios have owned movie theatres since the Paramount Decree. Mann Theatres has been owned by a partnership between Warner Brothers and Paramount Pictures for a number of years. Universal had a 49% ownership stake in Cineplex Odeon as the latter rose to become a titan of the industry in the 1980s. And Tri-Star Pictures bought the Loews theatre chain in 1985, retaining ownership of the chain (which even changed its name for a while to Sony Theatres after the Japanese corporation purchased all of Columbia Pictures’s assets in the late 1980s) for seventeen years. The Decree might still exist on paper, but it hasn’t been effectively enforced for quite a while.

You also say consumers are having trouble getting what they want, when they want it. Movie theatre attendance is higher than its been in many years, and with the advent of the megaplex and digital cinema, consumers rarely have to worry about finding out their movie sold out. There are a veritable plethora of stories about how all-digital projection cinemas were able to adapt on the fly during pre-opening midnight shows to have movies like the recent Iron Man and Twilight sequels to play on every screen in the building, when originally only three or four screens were planned.

VOD and PPV have never been that big of a factor, despite how badly the studios might want it to be. Fact of the matter is, with the FCC’s recent ruling, there was nothing that was stopping Paramount from doing a one-time-only, $20-per-pop VOD screening of Iron Man 2 on the night before opening. But Marvel and Paramount had so much money tied up in the film that possibly cannibalizing that opening weekend crowd, from which they will get as much as 90% of the ticket sales minus the house nut, that no distributor will ever seriously go that route with their big tentpole films. There is a reason why only Magnolia and IFC Films regularly do simultaneous or pre-opening PPV/VOD screenings with theatrical, and more often than not, the films that get this kind of treatment only do marginal business in theatres.

And then your points about DVD are completely off-base, from the minor point about the video window (which is more like seventeen to eighteen weeks, instead of twenty) to your ascertain that movies cannot be rented for 28 days after they are released on DVD. Blockbuster has a deal with some studio-affiliated home video distributors to have some titles only available for rental at Blockbuster for 28 days before being released to Redbox and Netflix, but anyone who wanted to rent The Blind Side or Sherlock Holmes the day it was released on DVD could have done so, provided they went to Blockbuster, and provided the Blockbuster they went to had enough copies to go around that day.

Oh, and while the lack of available Digital 3D screens did hurt Avatar when Alice was released, there are a number of theatres still, to this day, more than a month after its home video release, playing Avatar in 3D, and doing very good numbers with it.

There are many other points I could make, but I have to go to work now. Suffice to say, it’s not that much of a surprise that such a poorly researched, poorly constructed argument sat for nearly two weeks before even one person felt the need to comment on it. "

TLSLOEWS on May 25, 2010 at 6:25 pm

Now there are two.

moviebuff82 on May 25, 2010 at 7:24 pm

Loews Theaters once owned MGM and played its greatest movies in its theaters before parting ways with MGM in 1954 and became an independent chain until Tristar Pictures took over in 1985, the same year that its blockbuster movie Rambo played at many of its theaters, which served Coke sodas from the same company that owned part of Tristar until 1987, when it spun off the movie assets. From 1989 to 1998, Sony took over the operations and even introduced SDDS as the theater’s flagship digital sound system (along with AMC), showcasing many Sony films in that format before closing shop on the audio divison in 2002.

Coate on May 25, 2010 at 7:31 pm

Wow, Justin, a sixty-eight word sentence! Shall I call the folks at Guinness? :–)

moviebuff82 on May 25, 2010 at 7:32 pm

The Loews, Magic Johnson, Star, and Cineplex Odeon theatres still used SDDS until AMC merged operations with Loews in 2006 when Loews was under Chapter 11 and spun off from Onex Capital. By that time AMC installed Dolby Digital EX systems in those theaters as well as its main AMC chain. The big three theater companies are not run by studios, but run as regular companies. Two of them are public, the other a private company. Cablevision’s movie studio, IFC Films, has its films being shown at the IFC Center in NYC as well as its Clearview Cinemas chain.

CSWalczak on May 25, 2010 at 8:58 pm

I am sure that I might have misread or misinterpreted something, but my reading of the article was that the author was advocating allowing studios to once again own theaters outright as opposed to have an interest in or a minority stake in a theater operating company, which, as the first commentator pointed out, has already occurred. The article’s author, I think, envisions something like new chains of Paramounts or Disney-branded theaters through which the studios could funnel their films, apparently believing that existing regulation and the current structure of the market place would prevent the unfair control of film distribution which was at the heart of the court’s 1948 decision.

John Fink
John Fink on May 25, 2010 at 9:17 pm

Holding companies can indirectly own US theaters (Paramount and Warner Brothers jointly own Mann’s holding company, National Amusements is the holding company for CBS and Viacom). The problem is block booking I believe is still illegal, each picture is booked on a case by case basis. If Disney were to buy Regal Cinemas and allow all product to be shown at Regal, you would in essence be creating a block booking type of situation where all product, no matter what instantly goes to Regal. There are territories where Regal shares bookings with another theater down the street (in greater Buffalo, for example Regal Quaker Crossing doesn’t play the same films as Dipson’s McKinley Mall – allowing both to stay in business).

What is proposed is shutting off supply, which is a dangerous and would allow studios to purchase stakes in US chains for the sole purpose of block booking which I think would harm the industry, create barriers for start ups on both sides. I worry about the lack of competition which leads to a decrease in services – the DVD section at Best Buy for example is less and less interesting without Circuit City to compete with.

Same for theaters: Regal does well in Buffalo because they are the only theaters in town with stadium seating, the other game in town is an AMC that AMC must have forgotten they own since other theaters like it closed or were sold in the 90’s (they let their General Cinemas' acquired locations either close or sold them), and Dipson is an excellent local chain but lacks stadium seating and large multiplexes. You’d need Rave or someone like that to shake things up in town.

Having studios own theaters and control product would lead to less resistance and higher prices for consumers, granted AMC and Regal got greedy jacking up 3-D prices, imagine what a studio calling the shots might do (then again it could cut both ways, maybe variable pricing by the week of the film’s run). I don’t think C. Robert Cargill’s argument takes into account the anti-completive nature already in existence in certain markets dominated by two chains. If AMC, Regal and Cinemark were team up to artificially inflate prices, most movie goers aren’t sophisticated enough to “shop around” unless a theater actively advertises its a discount house. (Same thing in Canada – most theaters are owned by Cineplex Entertainment, and smaller chains Empire and AMC)

On a more personal level I’ve noticed the decrease in quality at the IFC Center – for $12.50 you can sit in a 40-seat closet and watch a first run film from a cinematic master projected from a cheap data projector they bought at Office Depot! Often unless you want to sit home and watch it on demand (if you have on demand), it’s the only option you have because IFC is fulfilling some contractual obligation. This is a scam if there ever was one, granted this would never happen to Iron Man? Or could it? I wish the economists would come down to human scale and see things from the perspective of a filmgoer, ownership of theater chains by studios would present the same frustration as movie goers feel at IFC Center, Clearview Cinemas or sub-par art theaters where you deal because they’re the only game in town showing the film you want to see.

Al Alvarez
Al Alvarez on May 26, 2010 at 1:11 am

Since most major chains showed “ALICE IN WONDERLAND”, albeit on special terms, what this producer wants is not just studio control of every major theatres (they already have that) but rather studio control of every theatre in the world.

Good luck with that!

Did he ever think that if 20th Century-Fox, instead of Disney could control more theatres “ALICE” would have had a marginal opening and not been able to scoop up all those 3-D IMAX screens away from “AVATAR”?

ceasar on May 28, 2010 at 5:46 pm

U want to know something the local cinema had the poster for Alice but it didn’t open with it all. Even 2d the operator didn’t bring it this market at all. Wilcox Theaters has a predjuice toward tim burton films I learned from one the teens at blockbuster.

John Fink
John Fink on May 29, 2010 at 5:54 am

That’s awesome! I personally HATE Tim Burton flicks! Where are Wilcox Theaters? If I’m ever in town I’m going to stop by, see a flick and buy lots of snacks to support this place!

moviebuff82 on May 29, 2010 at 9:55 pm

You do? I always own a bunch of Tim Burton movies, some of which are good. Batman is overrated, the 1989 one. His arty films, such as Sweeney Todd and Big Fish, are really good. My cousin is a huge Tim Burton. I was at the Clearview in Mansfield for Alice during its last legs in 2-D in a small auditorium. During the movie, the theater lights went on and off then finally was off. When the on-screen credit began at the end of the film, the screen went dark. Seems that Clearview is running this place into the ground as much as their other theaters as they jack up prices too. As for the DVD window, it’s easier for me to check out when a film is on Netflix.

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