Justice Department May Reverse Law Keeping Major Studios From Owning Theaters

For 70 years, major film studios were barred from owning movie theater chains. But this could soon change. The Trump administration's Department of Justice has announced plans to review the antitrust rules that have governed Hollywood for the better part of a century. And in the process, we could see a major shift in how studios distribute movies, and possibly, how we go see them.

The Department of Justice announced on Thursday its plans to review the 1948 Supreme Court case that forced major Hollywood studios to sell their ownership stakes in movie theaters, according to The Wrap. Titled United States v. Paramount Pictures, the case was effectively the first nail in the coffin for the Golden Age of Hollywood, which operated through a tightly-controlled studio system by which studios required its theaters to take an entire slate of its films before they were even produced (a process known as block booking, which was outlawed by the case).

But things have dramatically changed in Hollywood since the ruling was made. Disruptive streaming services like Netflix have coincided with dropping ticket sales and higher ticket prices. And while services like MoviePass have possibly helped boost ticket sales for the first time since 2015, ticket sales have still been on a downward trend since they peaked in 2002, BirthMoviesDeath notes.

Box office gross only makes up a portion of a film's total revenue — which is why superhero and franchise tentpoles rely so heavily on merchandising. But with the advent of Netflix, broadcast and streaming have become the heavy-hitters. Assistant Attorney General Makan Delrahim said as much in a statement:

"The Paramount Decrees have been on the books with no sunset provisions since 1949. Much has changed in the motion picture industry since that time. It is high time that these and other legacy judgments are examined to determine whether they still serve to protect competition."

So how could studios owning theaters have an impact on lower movie theater attendance and the rise of streaming services? It's possible that studios simply want to stem the money they're losing on films by cutting down on distribution costs — by owning theaters, they could pocket 100% of revenue. And it's even possible that Netflix itself has been lobbying the DOJ so that it could get in on the theatrical distribution pie.

But as major companies like Disney and 21st Century Fox, or AT&T and Time Warner, merge their assets, could we possibly see the return of the studio system that the 1948 case first broke up? It's too soon to say, but we'll have to wait and see as the DOJ holds in its hands the future of Hollywood distribution.