Los Angeles Acting blog by David August: What's Old Is New Again: Antitrust

Wednesday, September 16, 2015

What's Old Is New Again: Antitrust

70 years ago, movie studios could own movie theatres. And they did. They could fill them with whatever films they wanted, like their own movies they made themselves. The ownership of everything from the beginning of the production all the way through the final sale to the end consumer (vertical integration) means lots of money and control. Never letting any competition in, or dictating terms to them, can be good for your short term bottom line.

In 1948, in US v. Paramount, the Supreme Court said it was no longer ok for studios to own the theatres too. That's why today they by and large don't. Or do they:

Giant-screen specialist IMAX Corp. is joining the content creation party, and will be generating its own movies and other programming in the near future, the company’s entertainment chief executive officer Greg Foster said Wednesday.

With the digital explosion creating countless new streaming platforms, there has been a rush to fill the content void by media firms and companies better known in other sectors, like online retailer Amazon.com and Marriott Hotels

(from IMAX Theaters to Expand Into Movie Production).

I'm not saying that making a handful of films to fill holes in programing is at all anti-competitive, nor it is likely to run into the Department of Justice's lawyers taking any action. It does suggest an interesting possibility for distribution in general: does a company (like Netflix, Amazon, Hulu, etc.) making the show and owning the distribution channel it is released on seem similar to a movie studio owning theatres? Right now it's an academic thought; there is still a great deal of competition between these players and the vast majority of their new offerings were not made in house, at least not yet.

It isn't just me looking at such things, and according to the Wall Street Journal, as recently as June the government was still moving forward on whether the largest chains are already crossing antitrust lines:

Regal Entertainment Group and AMC Entertainment Holdings Inc., the nation's two largest movie theater chains, have received formal inquiries from the Justice Department's Antitrust Division, signaling growing government scrutiny of a tactic large theater operators commonly use to keep movies out of competing locations.

If the coming months and years result in consolidation in theatres and/or online outlets, maybe the anti-competitive possibilities will require more attention. Right now though, it just makes for an interesting show.