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Justice Dept. asks court to scrap decades-old 'Paramount' antitrust decrees

By Diane Bartz
FILE PHOTO: Makan Delrahim, assistant Attorney General, Antitrust Division, U.S. Department of Justice speaks at the WSJTECH live conference in Laguna Beach, California

By Diane Bartz

WASHINGTON (Reuters) - The U.S. Justice Department said on Monday it would ask a court to scrap decades-old 'Paramount' consent decrees enacted to protect movie theatres from powerful studios.

Makan Delrahim, head of the Justice Department's Antitrust Division, said the Justice Department would file this week to ask a federal court in the Southern District of New York to terminate the decrees, which have no expiration date.

The agreements regulating relations between movie studios and theatres, which the industry calls the 'Paramount' consent decrees, were reached in the late 1940s and early 1950s, when movie theatres had just one screen, televisions were not universal and online streaming was decades into the future.

Before the rules took effect, studios commonly sold multiple films to theatres as a package. The U.S. Supreme Court in 1948 ruled against the practise, called "block booking," and others that favoured studios, leading the plaintiff, Paramount Pictures, Inc, and its peers to sign consent decrees with the Justice Department that banned such deals over the next few years.

Delrahim said he would ask for a two-year sunset period on block booking, in which studios forced theatres to take unpopular films in order to get blockbusters, and circuit dealing, in which one lisence covers all theatres in a theatre circuit.

"The sunset period will allow the defendants and movie theatres a period of transition to adjust to any licensing proposals that seek to change the theater-by-theater and film-by-film licensing structure currently mandated by the decrees," Delrahim said in a speech to the American Bar Association's fall antitrust gathering.

The consent decrees also barred studios from owning movie theatres without a court's approval and banned rules setting minimum prices for movies.

The National Association of Theatre Owners, which represents movie theatre companies with 33,000 screens across the United States, had urged the department to forbid movie studios to return to the practise of block booking.

The Justice Department has been reviewing more than 1,000 consent decrees with no expiration dates affecting a range of industries, with an eye towards cancelling them.

Other controversial consent decrees under review are two reached in 1941 with music licensing groups American Society of Composers, Authors and Publishers (ASCAP) and Broadcast Music, Inc (BMI). A termination could upend the business of licensing music to online companies, movie companies, commercials, bars and restaurants since ASCAP and BMI license about 90 percent of music.


(Reporting by Diane Bartz; Editing by Dan Grebler)