By Brent Kendall and Erich Schwartzel
WASHINGTON — The Justice Department is moving to terminate legal rules that have governed the movie industry since the late 1940s, a step that could shake up how movies are distributed and the terms on which they hit the big screen.
The department’s antitrust division has concluded that the rules, laid out in long-ago legal settlements known as the Paramount consent decrees, have outlived their usefulness in a world where the movie business has changed considerably.
“As the movie industry goes through more changes with technological innovation, with new streaming businesses and new business models, it is our hope that the termination of the Paramount decrees clears the way for consumer-friendly innovation,” Makan Delrahim, the department’s top antitrust official, said at an American Bar Association conference in Washington, D.C. on Monday.
The ruling largely prohibited the studios from owning the theaters where their movies played, as well as from requiring theaters to play either several of their movies or none at all, an all-or-nothing deal known as “block booking.” And it stopped certain industry practices that limited when and how films could be shown in particular areas.
The DOJ’s decision is a particular blow to the nation’s dwindling number of independent theaters and smaller studios trying to squeeze movies into a release calendar increasingly dominated by big-budget franchise titles. Smaller operators have complained in recent years about not being able to afford the onerous distribution terms required by studios to show their biggest blockbusters — terms that major chains can stomach but mom-and-pop operations cannot. In extreme cases, up to 70% of ticket sales on a major release can flow back to the studio.
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