Try as I might I can’t figure out exactly what the editors of the Wall Street Journal are saying they like or don’t like in this editorial:
Americans nowadays have a plethora of options to stream movies online, and many may not recall the last time they viewed a film in a theater. So credit to the Justice Department for getting with the digital times.
The Antitrust Division on Friday asked the U.S. Southern District Court of New York to terminate the 70-year-old Paramount consent decrees that restrict how films are distributed in theaters. As antitrust chief Makan Delrahim noted, “These decrees have served their purpose, and their continued existence may actually harm American consumers by standing in the way of innovative business models for the exhibition of America’s great creative films.†Hear, hear.
During the 1930s, eight major studios controlled film distribution, and five also owned theaters. In that pre- Netflix -DVD-VHS-multiplex era, theaters had single screens, crimping film distribution. The Justice Department discovered that the major distributors were colluding to limit competition. In 1938 the government sued the distributors under the Sherman Antitrust Act for conspiring to fix licensing terms, among other things.
Distributors lost at the Supreme Court and were required to divest their theaters. Government consent decrees also prohibited them from engaging in licensing practices that are common in other industries. For instance, distributors were forbidden from bundling film licenses or providing exclusive licenses to theaters in geographic areas.
New distributors such as Disney (which isn’t covered by the decrees) benefitted, but the movie scene has changed in seven decades. Even small-town theaters have multiple screens—an AMC in Peoria is currently showing 16 films—and most films can be streamed online within months of their debut.
Small distributors and filmmakers also have other launching pads. Netflix plans to release more than 50 films this year—more than Warner Bros., Disney and Paramount combined. MGM distributed 52 movies in 1939, including “Gone with the Wind,†“The Wizard of Oz†and “It’s a Wonderful Life,†but distributed only three last year. All were duds.
Let’s stop right there. Does no one copy edit this stuff? It’s a Wonderful Life wasn’t released in 1939 but in 1947, one of Jimmy Stewart’s first post-war pictures. And it wasn’t distributed by MGM at all. It was distributed by RKO. Gone With the Wind was produced by Selznick’s organization and distributed by MGM. The Wizard of Oz was produced and distributed by MGM and shown in its theaters. BTW two of three of those movies flopped.
The context of the consent decree they don’t seem to like is that Metro-Goldwyn-Mayer (and other studios) were vertically integrated monopolies. They produced the movies, distributed them, showed them in their own theaters, and they didn’t show movies other than their own in those theaters. They used their monopolies to prevent upstarts from competing with them and used their control of the whole process to lock performers into contracts that paid them far less than they were worth.
Do the editors just not like government regulation? Or do they like government regulation that subsidizes big businesses but not regulation that controls them? Personally, I have no problem with any level of government regulation of companies that wouldn’t exist at all without government-granted monopolies.
As I have documented in earlier posts there are only a handful of vertically integrated companies today that control broadcast television, streaming, cable, and, increasingly production. Those companies are creatures of government action either via exclusive franchises or insanely long copyright durations. Amazon wouldn’t exist, at least not in its current form, unless it had been exempted from collecting and paying sales tax for nearly 20 years. It, too, is a creature of government.
IMO Disney needs to be broken up. I presume that the editors would like that even less than the consent decree that prevented the old studios from owning their own theaters.
