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DOJ Will Review 70-Year-Old Consent Decrees That Regulate How Studios, Exhibitors Do Business

August 2, 2018Article
Variety

WASHINGTON — The Justice Department said it will review consent decrees which for almost 70 years have regulated how major movie studios distribute films to exhibitors.

If the review leads to significant changes to the consent decree, it could alter the dynamics of the business and perhaps lead to consolidation. It will examine whether the longtime prohibition on studio distributors owning movie theaters is still necessary to protect competition.

The DOJ’s Antitrust Division is opening up a 30-day review period for public comment, with a deadline of Sept. 4.

A landmark 1948 Supreme Court decision in favor of the government forced major studios to sell their theater chains, a decision that has had a huge influence on the legal interpretation of antitrust concerns when it comes to vertical media mergers. It led to the demise of the so-called studio system, in which the seven major studios of the time held tight control over all aspects of production, distribution, and exhibition.

Schuyler (Sky) Moore, partner at Greenberg Glusker in Los Angeles, said removing the consent decrees would be significant for major studios, as “they have been hanging over everyone’s head for a long time” and have created a sense of uncertainty of whether they apply to certain types of distribution and exhibition.

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