Vertical Integration Is Legal Again. What Does This Mean for the Film Industry? - Studios can own Theaters Again.

[Getting tard comed]

This could go in Multimedia or Da Bidness but I'm posting it here due to overlap.

https://nofilmschool.com/vertical-integration-legal

Spoiler: Article

A federal judge addressed the possibility that a major studio will merge with a major theatrical chain.
No, you're not back in your freshman year film studies class, and it's not the 1940s... this is happening right now.

Wait, so what's going on? Well, in short, Paramount Consent Decrees are officially over. On Friday, a New York federal judge granted a motion by the U.S. Department of Justice to terminate the movie industry's long-lasting licensing rules.

What are the Paramount Decrees?
Back in the earlier days of Hollywood, movie studios controlled the making of and distribution of movies. That meant, they could own their own theaters and only show their movies as many times as they wanted.

Studios controlled the production, distribution, and exhibition of the film by the same company, and because of this, they received all of the profit.

This led to a major antitrust lawsuit from the United States government. The resulting decisions were called The Paramount Consent Decrees.

The Paramount Consent Decrees have been in effect since the late 1940s. Because of the U.S. Supreme Court's landmark 1948 decision in United 
States v. Paramount Pictures, the studios had to divest themselves of their exhibition holdings.

That meant theater owners were no longer subjected to the demands of big studios like Paramount.

A court-approved settlement then established rules governing the licensing relationship between certain studios such as Paramount and Warner Bros. and theater owners.

Those laws have existed ever since.

What's Happening Now?
The Trump Department of Justice said they were coming after the decrees, and now they've done it. We used to have bans on things like block-booking, which was the bundling of multiple films into one theater license. That meant you couldn't force a small theater to take your crappy movie if it only wanted to show your popular one. We also had a ban on circuit dealing, which is the practice of licensing films to all movie theaters under common ownership, as opposed to licensing each film on a theater-by-theater basis. So, you can't have Disney only sell their movies to Regal or AMC.

Well, now all of that is legal...and independent theaters are terrified. How can they stay open if they're forced to use a certain number of screens, or have to make deals with certain studios or miss out on showing their movies?

And what happens when places like Disney, Amazon, Apple, and maybe Universal buy their own theaters? Can they just prevent other people from showing their work and effectively put national chains out of business?

Why allow your stuff to be shown at AMC or even The Vista when you have your own chain to keep open?

August 7, 2020
Vertical Integration Is Legal Again. What Does This Mean for the Film Industry?

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A federal judge addressed the possibility that a major studio will merge with a major theatrical chain.
No, you're not back in your freshman year film studies class, and it's not the 1940s... this is happening right now.
Wait, so what's going on? Well, in short, Paramount Consent Decrees are officially over. On Friday, a New York federal judge granted a motion by the U.S. Department of Justice to terminate the movie industry's long-lasting licensing rules.
What are the Paramount Decrees?
Back in the earlier days of Hollywood, movie studios controlled the making of and distribution of movies. That meant, they could own their own theaters and only show their movies as many times as they wanted.
Studios controlled the production, distribution, and exhibition of the film by the same company, and because of this, they received all of the profit.
This led to a major antitrust lawsuit from the United States government. The resulting decisions were called The Paramount Consent Decrees.
The Paramount Consent Decrees have been in effect since the late 1940s. Because of the U.S. Supreme Court's landmark 1948 decision in United 
States v. Paramount Pictures, the studios had to divest themselves of their exhibition holdings.
That meant theater owners were no longer subjected to the demands of big studios like Paramount.
A court-approved settlement then established rules governing the licensing relationship between certain studios such as Paramount and Warner Bros. and theater owners.
Those laws have existed ever since.


South Sefton CollegeCredit: Video is no longer available: www.slideshare.net/mattheworegan/lesson-4-industry-30337666

What's Happening Now?
The Trump Department of Justice said they were coming after the decrees, and now they've done it. We used to have bans on things like block-booking, which was the bundling of multiple films into one theater license. That meant you couldn't force a small theater to take your crappy movie if it only wanted to show your popular one. We also had a ban on circuit dealing, which is the practice of licensing films to all movie theaters under common ownership, as opposed to licensing each film on a theater-by-theater basis. So, you can't have Disney only sell their movies to Regal or AMC.
Well, now all of that is legal...and independent theaters are terrified. How can they stay open if they're forced to use a certain number of screens, or have to make deals with certain studios or miss out on showing their movies?
And what happens when places like Disney, Amazon, Apple, and maybe Universal buy their own theaters? Can they just prevent other people from showing their work and effectively put national chains out of business?
Why allow your stuff to be shown at AMC or even The Vista when you have your own chain to keep open?




U.S. District Court Judge Analisa Torres agrees with the government that times have changed... and so must the rules.
"Given this changing marketplace, the Court finds that it is unlikely that the remaining Defendants would collude to once again limit their film distribution to a select group of theaters in the absence of the Decrees and, finds, therefore, that termination is in the public interest," she writes in a 17-page opinion that goes against the one made 80 years ago.
Torres does accept that certain conduct once deemed illegal may now be acceptable...but theater chains are fighting to stay open nationally, and this feels like a nail in their coffin.
Her opinion states, "The Court finds that changes to antitrust administration, in particular, the HSR Act, provide federal antitrust agencies with notice and the opportunity to evaluate the competitive significance of any major transaction between a movie distributor and a theater circuit, which suggests a low likelihood of potential future violation."
I can't help but see this as a really bad idea that lacks complete foresight. We're going to lose many independent theaters to these changes, and maybe even independent movies which will have no place to be shown.
This, plus the shift to watching things online, is about to damage one of America's first industries.
But, her opinion doesn't seem to take that into account.
"In today’s landscape, although there may be some geographic areas with only a single one-screen theater, most markets have multiple movie theaters with multiple screens simultaneously showing multiple movies from multiple distributors," states the order. "There also are many other movie distribution platforms, like television, the internet and DVDs, that did not exist in the 1930s and 40s. Given these significant changes in the market, there is less danger that a block booking licensing agreement would create a barrier to entry that would foreclose independent movie distributors from sufficient access to the market."
Support a local theater any way you can.
The times are certainly changing...

Author is worried about independent theaters dying while missing the larger picture that movie theaters as a whole were facing the fate of the Dodo before Corona hit and Corona's made it worse.

The judges reasoning is a little unsound and to me but this is a way to save movie theaters as a thing that exists in a way that isnt just Broadway 2.0.

Kiwis?

 

[Stoneheart]

hm Disney owning 2 streaming services is maybe a bigger problem than the corpses of cinemas?

 

[Super-Chevy454]

And the theaters aren't only hit by Corona-chan, Netflix and Amazon Prime also hit them very hard under the belt.

 

[The Bovinian Derivative]

U.S. District Court Judge Analisa Torres agrees with the government that times have changed... and so must the rules.

Yeah I mean slicing up an ever shrinking pie will definitely not be the kiss of death for the industry.

If streaming proves to be a success for a company like Disney they'll have less incentive to put out anything to independent theaters when said theaters take a major cut from ticket sales. As for studio owned they'll be dumb to maintain theater chains when its more profitable to upload a movie to a server and sell subscriptions.

The RLM guys made a video where they talked about how Star Wars box office could be saved by treating the movie release as a high price experience for dedicated fans and considering how your average blockbuster movie is ten hours long maybe that's something big companies could aim for: have your own theaters where every big release is an event for everyone who pays big money for it, but this is just autistic speculation from my part.

 

[Hard Toothbrush]

The RLM guys made a video where they talked about how Star Wars box office could be saved by treating the movie release as a high price experience for dedicated fans and considering how your average blockbuster movie is ten hours long maybe that's something big companies could aim for: have your own theaters where every big release is an event for everyone who pays big money for it, but this is just autistic speculation from my part.

They also mentioned another idea on their Justice League commentary track on Bandcamp: trim out the unnecessary fat ("story", "characters" etc. since the average viewer doesn't care about them and most time they're done poorly anyway) from those dumb summer flicks (Marvel movies, action schlock etc) and make them 30 minutes of just non-stop action. That way, instead of showing one dumb movie in a 2-hour block you get to show four which = more money.

 

[Syaoran Li]

I see this going one of three ways...

1. The studios decide to get control of the theaters just before the big die-off

2. This acts as an impromptu bailout and they can use the theaters for big theatrical releases with tickets sold at a premium like a big event

3. The same but independent theaters actually benefit from the chains being bought up by studios and we go back to the days of the grindhouses (Drive-Ins already are making a small comeback) and with the lower costs of filming a movie compared to twenty or even ten years ago, we'll see a return to the days of the 70's and early 80's where the Hollywood mainstream and low-budget genre movies co-exist but fill separate niches.

Normally I'd say streaming media would ruin that possibility but with every studio having their own streaming service, Amazon being prone to censorship and wokeness, and the costs for entry being more difficult, independent or low-budget studios and filmmakers could group together to make a bigger push for physical media (DVD, Blu-Ray) and theatrical releases.

Entrepreneurs could take advantage of this market vacuum once COVID-19 fully burns itself out (and it will, since lockdowns are not economically viable long-term) and we could see both lower budget genre movies that offer something edgier than the bland woke studio franchises but isn't pretentious arthouse drivel and smaller theaters opening up that offer more of this fare since right now, the majority of non-chain theaters have been arthouse theaters. Independent but not "indie" as it were.

 

[TowinKarz]

Theaters are dead and doomed, if Disney wants to own all the obsolete money-losing pits so no one else can? Fine. It's not gonna hurt me.

 

[Samson Pumpkin Jr.]

ALL THESE BITCH ASS FREE TRADERS SAY THAT VERTICAL INTEGRATION IS IMPRACTICAL AND DOESN'T HAPPEN, BUT AS SOON AS THE LAWS ARE LIFTED BUSINESSES VERTICALLY INTEGRATE. This is another epic win for protectionists world wide and proves that countries should vertically integrate their industries. Economic nationalism is practical nationalism.

 

[wtfNeedSignUp]

Isn't vertical integration fucking while standing up?
Anyways it might be my country but ticket and food price soared the last decade while the experience only got worse (more cramped, no toilet breaks).

 

[Syaoran Li]

Theaters are dead and doomed, if Disney wants to own all the obsolete money-losing pits so no one else can? Fine. It's not gonna hurt me.

Chain theaters and large multiplexes are definitely dead and doomed although if they're studio owned, they can probably survive in a seasonal and limited form.

I think there can be room for smaller independently-owned theaters after Corona is over and done with. An entrepreneur who can keep the operating costs low can probably run a small one or two-screen theater and keep the overhead low. Especially if they cater to the non-arthouse crowd.


The studio-owned chains will probably keep the theaters open for big franchise events but there will always be a market for "problematic" genres and media. Prior to the rise of streaming media, the only way independent theaters could open is if they were arthouse theaters that specialized in showing pretentious indie garbage, but drive-ins came back precisely because of COVID-19 and if the chain multiplexes are killed off, then I think there's potential in a revival of drive-ins, grindhouses, and dollar theaters that specialize in airing older, niche, or independently made movies.

Bonus points if you can strike distribution deals with smaller B-Movie studios like Troma or The Asylum.

The corporate consolidation of streaming media might have a crowding out effect of non-woke and non-corporate media at first, but as long as Blu-Ray and DVD remain in production and aren't totally rendered extinct like VHS and cassette tapes were, there will be a market for the more "problematic" B Movie and Z Movie fare, and for niche genres like anime or older titles and if you can strike deals with the smaller streaming services and it does well, that is also a plus.

This could actually be an entirely new opportunity for a lot of genres that have fallen out of style and deemed "problematic" in the age of capeshit, reboots, and pretentious indie fare. The market is still there and there are a lot of people who are burnt out on Marvel and similar fare and a new generation is coming up that will seek out something different than what Disney and Warner are putting out right now.

The issue is that the right people need to get off their asses and make this happen. I've actually been doing a fair bit of research on how to write a movie script and how to make a horror movie on a very low budget.

Self-publishing via Amazon and physical media is the first step and if you can generate buzz for your movie online, it can get an audience.

 

[Getting tard comed]

hm Disney owning 2 streaming services is maybe a bigger problem than the corpses of cinemas?

I believe its 3 now(technically 4 if we are already including Hulu, ESPN+, Disney+) they announced a new streaming service in their last shareholder call.



This is the only way a movie theater experience was going to survive with all the changes taking place(not Corona) so it's the lesser evil as far as I'm concerned. It might actually prove to be a good thing in the long run for independent theaters as well as the quality of movies in general. With the ability to make movies more democratic(and it's only increasing) than it used to be theaters *should* have a wider base of films to show.

Theres a lot of potential upside in this and the downside is minor when juxtaposed to movie theaters disappearing entirely.

 

[Lady Adjani]

Anyways it might be my country but ticket and food price soared the last decade while the experience only got worse (more cramped, no toilet breaks).

Yup, I never did like the 'theater experience' to be honest, opening nights were always packed to the brim with obnoxious teenagers or even worse, kids. Maybe I'm just too old and jaded at this point, but the last set of movies I found worthy of the admission price was the LoTR trilogy.

 

[Next Task]

I can't get past that a large part of the reasoning behind it is, 'Well, I don't see why these giant corporations would collude to make themselves more money, so of course we should legalise it!'

Expecting corporations to just 'do the right thing' and not form monopolies when they can? Trusting them to not abuse a structure designed to squeeze out their competitors so they can make more money?

Trusting Disney specifically to not continue their efforts to completely dominate the marketplace so all products turn out to be Disney products?

That reasoning seems inherently flawed.

 

[Duncan Hills Coffee]

This shit is absolutely terrifying to me because it further indicates a willingness to just let monopolies happen in this day and age. The big reason why they disallowed movie companies to own theaters was because they realized they were monopolizing the entire film distribution process. Independent theaters basically couldn't stay afloat back then because all the big theaters were getting all the hottest movies while they were getting table scraps.

I get that Corona's basically destroying what was already a dying business, but I don't think the answer is to allow the big corporations to regain control of the industry wholesale.

My only hope now is that the independent theaters (which are the only theaters showing anything interesting these days) have enough unique movies and events to survive. I'd wager it's somewhat easier for those places to get movies these days since independent filmmaking's been a thing for the past 30 odd years, not like it was in the 1940s where only studios could produce movies. The best movie-going experiences I've had were at the indie theaters anyway, and I don't want to see them go away.

 

[whatever I feel like]

Banning so-called vertical integration in the film/tv/radio industry but nothing else was bullshit anyway. This is a lot less harmful to competition than letting Disney buy Fox was.

 

[Syaoran Li]

Banning so-called vertical integration in the film/tv/radio industry but nothing else was bullshit anyway. This is a lot less harmful to competition than letting Disney buy Fox was.

True, and part of why the old studio-owned theater system was so devastating was because of the Hays Code back in the day. If your movie didn't pass the standards of the code, you would not be able to get your movie made or distributed by the studios. It was even more expensive to make movies back then than it is now too.

The Hays Code hasn't existed since the 1960's and the costs of low-budget film making has gone down drastically since then. Keep in mind that the grindhouses didn't become a big thing until the demise of the Hays Code and the United States vs. Paramount decision.

I think we've got the potential for a revival of grindhouses, drive-ins, and other independently owned theaters. Drive-ins are already coming back thanks to Corona, and I think the cultural climate is right for a return of independent films that are not "indie" (AKA snobby arthouse fare)

If you play your cards right, you can easily make a fair bit of money marketing a "problematic" low-budget movie that is different than the usual Hollywood capeshit and reboots.

Especially if you go with the attitude of "Let's just have fun again, no politics attached" and while I would not be surprised if the big studios try to shut it down since they've already been attacking anime pretty hard for the past five years/

At the same time, I think these independent productions will be able to fly under the radar for a while whereas anime has the backing of Japanese studios and corporations, and the fuckers in charge of studios like Disney/Marvel already know the potential of anime since there was the "Anime Boom" of the early 2000's. Warner knows its potential firsthand since said boom was heavily driven by the OG Toonami and the early years of Adult Swim.

 

[whatever I feel like]

For what its worth, I don't think that the pre-2020 theater model is dead either. People stopped showing up because they didn't want to catch the virus, not because they don't like the theater. Streaming hurts, obviously, but the biggest films are bigger than ever and people want to see them on big screens as part of an event. There are too many screens in the country right now, but that doesn't mean that the cinema is dead.

And furthermore, one thing that I think could come out of this is a return to movie revivals at big chains. Jurassic Park won against non-existent competition a few weeks ago but being honest, I'd rather see that in the theater than any current year movie. The concept is a hidden gem that could do with more than just independent cinemas and film festivals.

Now, as a final note and to bring things back on topic, just because the cinema isn't dead doesn't mean its the only game in town either. There are movies that are better consumed at home, ones that don't rely on bombast, that want to make you think, that wouldn't attract enough audience or just aren't worth as much time/investment from the audience. People are no longer forced to see those at the theater, they are a lot of the market and if monopolistic practices do arise among theater chains again (bullshit) then independent film can just go that sub-optimal route. As such there's no reason for vertical integration to remain banned in what is no longer one of the key aspects of movie making. Or, alternately, it should be enforced digitally as well and streaming services should not be allowed to own film studios or vice versa.

 

[Xarpho]

Vertical integration is what the anti-trust courts have repeatedly hammered against, like AT&T's ownership of who makes and owns the telephones, not their widespread reach against the U.S. (the "old" AT&T in the mid-1980s, of which the "new" AT&T, Southwestern Bell, was born from), or Microsoft's integration of a browser into their operating system.

Horizontal integration (Disney buying 21st Century Fox, for instance) probably hurts the end consumer the most, but the courts usually decide that "there's alternatives" even if a single industry has a monopoly. This is how there's only one satellite radio station that can get away with whatever it pleases (Sirius XM) because the courts decided that despite Sirius and XM Satellite Radio being effectively being the only satellite radio companies around, they cited that iTunes and others were enough "competition" that they allowed to merge.

 

[Getting tard comed]

For what its worth, I don't think that the pre-2020 theater model is dead either. People stopped showing up because they didn't want to catch the virus, not because they don't like the theater. Streaming hurts, obviously, but the biggest films are bigger than ever and people want to see them on big screens as part of an event. There are too many screens in the country right now, but that doesn't mean that the cinema is dead.

And furthermore, one thing that I think could come out of this is a return to movie revivals at big chains. Jurassic Park won against non-existent competition a few weeks ago but being honest, I'd rather see that in the theater than any current year movie. The concept is a hidden gem that could do with more than just independent cinemas and film festivals.

Now, as a final note and to bring things back on topic, just because the cinema isn't dead doesn't mean its the only game in town either. There are movies that are better consumed at home, ones that don't rely on bombast, that want to make you think, that wouldn't attract enough audience or just aren't worth as much time/investment from the audience. People are no longer forced to see those at the theater, they are a lot of the market and if monopolistic practices do arise among theater chains again (bullshit) then independent film can just go that sub-optimal route. As such there's no reason for vertical integration to remain banned in what is no longer one of the key aspects of movie making. Or, alternately, it should be enforced digitally as well and streaming services should not be allowed to own film studios or vice versa.

You should check out the total box office numbers since 2000. It has been a steady decline for the past few years and it gets even worse if you account for inflation. The theater experience has been dying for years prior to Corona-chan shutting everything down.

Your later paragraph mentions one of the reasons in streaming and some movies being percieved as not needing the big screen to enjoy. Other reasons like alienating your audience and catering to foreign markets more than American ones have all contributed to the decline in total box office for awhile now. Eliminating the theaters cut of the box office sales will help movie theaters continued existence.

The outright "monopoly bad" attitude is a little strange since capitalism tends to devolve(or evolves depending on your pov) into a monopoly on a long enough time frame if you allow for corporations like we have. The most efficient and profitable win out everytime, all the time. It is a zero sum game eventually if you don't put artificial blockers in place. Studios owning the theaters is the most efficient business method possible. I'd be interested in hearing specifics on why the previous vertical integration was bad and why this one will be if anyone has any. I disagree on the Hayes Code being a bad thing overall, some of the best movies in history were made under that code. Restrictions and limits force out creativity and all the codes Hollywood were under ended up producing some extremely compelling metaphors that are much better than what we see now w/o such restrictions in place.

 

[whatever I feel like]

You should check out the total box office numbers since 2000. It has been a steady decline for the past few years and it gets even worse if you account for inflation. The theater experience has been dying for years prior to Corona-chan shutting everything down.

No, I am in total agreement, when I said the biggest movies were bigger than ever it was with the unstated caveat that there are fewer of them and fewer mid-sized movies AND that they are all in one or two genres, with whole segments like "comedy" and "romance" (and especially the dreaded combination of the two) having fallen by the wayside.

And, once again unstated, my statement on the country having too many theater screens is in direct contrast to when those extra screens were put up in the 80s to early 2000s- a time when they did have a market. My proposal of big screens for big films (and horror movies, classic revivals, streamed live events, etc,) ironically enough, works much better in the mid-sized 6-10 screen multi-plexs of our youth compared to the 20+ screen behemoths of today. You know, the type of theater thats being razed across the country right now.

As to foreign (read: Asian and especially Chinese) targeting, its definitely at the expense of comedy, romance, morality plays or anything else which requires powerful/witty dialogue instead of action. Action is universal, fat man falls down is universal, writing has to be well translated and in the case of good wordplay rewritten entirely... Its definitely hurt those genres. Rom-coms seemingly don't even get made anymore. And as much as I find pandering to China to be disgusting, I do not think it has hurt box offices outside of a few cases (Red Dawn being rewritten to have a less relevant main enemy, big budgets going into shit like Transformers and PotC sequels that nobody in America wants but China eats up, etc.) And even then, if you are such a big believer in capitalism, shouldn't someone else be rising up to fill that niche? Rom-coms are dirt cheap to produce, why hasn't anyone taken that task on? AMC would probably love to show them if there was any market left for them. They show those shitty cash-in horror films.