“Yes, the consent decree may be outdated, but the idea that there’s danger in someone bulk-producing content and then controlling the distribution is not outdated — it’s very current,” said John Bergmayer, legal director of the Washington-based digital advocacy group Public Knowledge. “We should be taking the concept behind the consent decree and applying it to that.”
“The same problems,” he said, “happen in new guises."
Bergmayer is among a growing chorus of activists, academics and even industry players who say the abolition of the Paramount Consent Decrees offers a critical opportunity to examine the rules that a new entertainment world — one in which a few large companies control key aspects, from production to retail — demands. While they say reforms could include a variety of mechanisms, such as regulation and legislation, fundamentally their calls have one commonality: criticizing the government for not sufficiently recognizing new dangers.
The consent decrees were agreed to by eight major studios in 1948 after the Supreme Court deemed illegal various practices, such as “block-booking,” under which studios required a theater to buy a bundle of movies and not just the ones it wanted to show, forcing theaters to take bad movies with the good.
Collectively, those practices, the court said, gave the studios too much power to set prices and freeze out competitors. The goal of the decrees was to fight oligopolies by limiting studio control over movie theaters.
The rules have stayed in place since, establishing parallel worlds of studios and movie theaters — one group of companies to make the content and another to sell it to the public.
On Monday, Makan Delrahim, the assistant attorney general who leads the Justice Department’s antitrust division, said in a speech to the American Bar Association that he would ask a court to abolish them.
“We cannot pretend that the business of film distribution and exhibition remains the same as it was 80 years ago,” Delrahim told the group. “Much of our movie watching is not in theaters at all.”
Critics, however, say this is exactly the point — and why a new set of rules should be put in place.
“It’s disingenuous to say we need to get rid of the consent decree because people now watch streaming,” said Derek Long, a professor at the University of Illinois at Urbana-Champaign and an expert on the decrees. “What is streaming if not the ultimate form of block-booking — making consumers take the good with the bad? You can get rid of the consent decree, but you’ll still have the same issues from the 1930s that made them necessary.”
Advocates say a de facto new studio system consists of a small set of content companies that have a stranglehold on how consumers can access their work.
It includes Apple, which controls many of the world’s viewing devices; AT&T and Comcast, which control how many Americans get their broadband and telephone services; and Disney and Netflix, which control large subscriber bases. Left unchecked, they say, the new system will limit choice, cause price hikes and lead to numerous forms of anti-competitive behavior.
AT&T, which owns WarnerMedia, and Comcast, which owns NBCUniversal, remain among the biggest threats, activists say. The companies control not only huge amounts of content but also the pipes through which Americans access it. (AT&T also owns the satellite giant DirecTV.)
“I keep saying that Peacock doesn’t have to be good, because Comcast can just force us to watch it,” said Katharine Trendacosta, manager of policy and activism for the San Francisco-based Electronic Frontier Foundation, referring to the NBCUniversal company’s upcoming streaming service. “They give us a false choice — you think you’re choosing the service, but you’re just watching it because you have to subscribe to Comcast for your Internet."
That’s a particular concern, she says, in a climate without net neutrality, the regulation overturned in 2017 that required Internet service providers to offer equal delivery speeds to all content creators. Trendacosta warns that the ability for companies like Comcast and AT&T to control delivery will, in the absence of net neutrality, allow them to privilege their own streaming content.
It will also allow them to charge outside firms such as Disney and Netflix for fast carriage, resulting in higher prices for consumers as Disney and Netflix pass along the costs.
A sort of analogue version of that happened in the 1930s and 1940s, leading to the consent decrees. Barely half a dozen companies controlled star contracts, production schedules, distribution pipelines and exhibition options. That allowed them to set prices high; it was the only way consumers could watch the movies they wanted. Companies also carved out “clearances” — geographic exclusivity that had a movie available at only one theater in a region.
The decrees, part of a settlement between the studios and government, put several safeguards in place to fight this, restricting geographic exclusivity and block-booking. The decrees also required that the studios sell their theaters but stopped short of an outright ban.
The consent decrees could be a model for the new rules, advocates say, in which net neutrality is reinstituted to give independent producers the same advantages. (Federal lawmakers earlier this year squared off over the net neutrality-restoring Save the Internet Act, which the Democratic-led House passed but the Senate said it will not consider.
Other antitrust legislation could also be introduced to boost smaller producers and promote competition.
One ambitious possibility, advocates say, would be a regulatory authority empowered specifically to monitor streaming.
The battle could be difficult. The U.S. Court of Appeals for the D.C. Circuit earlier this year allowed the AT&T acquisition of WarnerMedia, blessing the very verticality that streaming engages in. But activists hope courts — and Congress — would be more sensitive to individual instances of alleged anti-competitiveness.
And industry players say the disadvantages they face in the current climate are clear.
Eamonn Bowles, who runs the venerable independent film distributor Magnolia Pictures, said the existing consent decrees don’t offer much protection from the real threat to his business.
“Of all the problems out there, finding screens is not the one that keeps me up at night,” he said. The bigger concern, he said, was breaking through the noise in a world dominated by big players like Disney Plus and Netflix.
Some theater operators agree that the scrutiny should shift to streaming. One independent operator who spoke on the condition of anonymity so as not to appear to be criticizing colleagues said theaters and studios are pretty healthily independent. That is in sharp contrast to Netflix and Disney, which combine production and distribution.
“I don’t think it’s really about the movie theater anymore,” the theater operator said.
Partly that’s also because consumer dollars aren’t going to theaters like they used to. According to a study by the Motion Picture Association of America, consumers worldwide spent $41.1 billion on movie theater tickets last year but a whopping $55.7 billion on home entertainment, primarily streaming.
The criticism comes at a time of increased calls to level the playing field in a number of digital realms.
A new California law on data protection has been held up as a model by privacy activists, who say the United States as a country lags too far behind European nations in protecting consumers’ sensitive information. Sen. Elizabeth Warren (D-Mass.), meanwhile, has drawn headlines for making a plan to break up Facebook part of her presidential campaign.
The media companies have argued that a fierce rivalry among the streamers has been good for consumers, and that Americans have more choice than when they were forced to subscribe to a cable bundle for at-home content.
But activists point to the price increases of live-television providers like YouTube TV and Hulu with Live TV — which have been significant of late — as evidence of the opposite trend. YouTube’s monthly fee for live content has gone up more than 40 percent, to $49.99, since last year, while Hulu has increased the monthly price of its live service nearly 25 percent, to $55, this year.
Consolidation among players as the “streaming wars” take shape is also a possibility, leading to increased prices and less choice among those that remain.
“It really could look a lot like what happened when you had a few studios” at the time of the consent decrees, Trendacosta said.
Whether consent decree-like protections can be put in place for entertainment content may depend on how willing smaller players are to accept the current situation.
The 1948 case was driven by discontent among upstart entertainment players that they had to play by the rules of a small number of megacompanies. Independent streamers, for their part, have struggled to survive and found themselves desperately seeking the biggest backers; in a world where Netflix has 160 million subscribers and Disney takes out splashy prime-time ads, they say competing can be impossible.
“There’s no question it’s a difficult climate if you’re independent. We have a lot of backing now we didn’t have before,” said Miguel Penella who oversaw Acorn before it was sold to AMC; he now serves as that company’s direct-to-consumer chief.
Meanwhile, the creative community, a likely key constituency in any push to regulate streamers, remains largely happy with the competitiveness of the streaming market; in their attempt to grow larger, streamers are spending huge amounts of money. But that could change if Wall Street fortunes turn or the companies decide to pull back — or even, as happened with studios during the 1920s and 1930s, companies start colluding to keep prices down.
“The question is whether people will be willing to give up some short-term profits to ensure a more competitive long-term environment,” said Bergmayer of Public Knowledge. “Because once all aspects of an industry are controlled by a few companies, it doesn’t take long before they start wielding that power.”