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US court ruling opens way for studios to own cinema chains

A court judgement in the US has opened the way for movie studios to own cinema chains for the first time since the 1940s, leading to fears that the sector could become dominated by the likes of Amazon, squeezing out smaller independent studios from theatrical distribution.

The US District Court Southern District of New York granted a motion by the US Department of Justice to end the Paramount Consent Decrees, regulations that date from a case brought in 1938 to challenge the practice of movie studios colluding through their ownership of cinema chains to favour their own content.

Under a 1948 Supreme Court judgement in a case involving Paramount Pictures, the big studios of the time were forced to divest their cinema chains, and regulations were put in place to ensure that licensing practices were not anticompetitive.

Favouring the Trump administration’s deregulatory drive, US District Court Judge Analisa Torres found that the market had changed to the point where such ownership rules are no longer necessary, with current antitrust law sufficient to ensure that cartels are not created. The judgement cited the fact that most of the major film distributors active today, and the streaming companies like Netflix and Amazon, are not subject to the rules in any case, dismissing the argument that the decrees established a convention that other studios observed since they were put in place.

The court ruled that the government had “offered a reasonable and persuasive explanation” for why the termination of the Decrees would “serve the public interest in free and unfettered competition” and that the DoJ’s inclusion of a sunset period of two years before rules preventing block-booking or bundling releases under a single licence, and circuit dealing, or licensing films to all movie theatres in a chain rather than to individual theatres, would provide sufficient protection for independents.