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Bringing Balance to the Antitrust Force: Revising the Paramount Decrees for the Modern Motion Picture Market

  • Author(s): Schwartz, Jonathan A.
  • et al.
Abstract

Concentration of market power is nothing new in the media industries—and neither is government intervention to break it up.  For over seventy years, the entertainment industry has operated under the shadow of agreements between the historically powerful film studios and the Department of Justice to stay out of the exhibition market, where the studios had cemented their dominance in the naissance of the American film industry.  During the same period, however, understandings of antitrust law have evolved and what was once a discrete “film” industry has ballooned into a massive entertainment marketplace.  While today’s streaming and technology giants battle the threat of increased regulatory oversight and calls for bolder antitrust enforcement, the general trend of legal and practical developments suggests a far less bleak outlook than that of their Hollywood progenitors.

In fact, the policies and arguments supporting the consent decrees that emerged from the 1948 Paramount decision have been severely weakened with the passing of time.  The acceleration of diversification in content and content providers has created new industry leaders like Netflix, HBO, and Hulu—and a proliferation of innovative competitors like Quibi and Peacock—that are apparently excused from Paramount’s constrictions.  Instead, the Paramount Decrees’ narrow focus risks stifling the competitive flexibility of “traditional” producers and distributors of theatrical feature films as they seek to combat these new market entrants.  In short, the Paramount Decrees appear obsolete given the realities of the film industry today.

This Article argues for revisions to, or rescission of, the Paramount Decrees in order to better align the permissible activities of traditional film studios with those of their modern competitors.  It provides a thorough review of the concerns underlying the Supreme Court’s holding in 1948 and determines that the Court’s concerns have been undercut either by subsequent developments in antitrust law or the practical realities of new and dynamic market entrants.  While the Court’s anticompetitive concerns may still be valid, they appear misplaced when focused solely on those parties still subject to the Decrees.  Future antitrust enforcement will instead need to reframe the picture in order to more accurately address risks of market concentration.

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