Historic Film Law Change Could Allow Major Studios to Own Movie Theaters

Movie studios may soon be able to own movie theaters. In a time where movie theaters are hurting due to ongoing shutdowns, a Manhattan-based federal judge overturned the "Paramount Decrees," a decades-old set of regulations that prevented theaters from becoming exhibitors. First implemented in 1948, the decrees also ended a process called block booking, where studios could force theaters to show less-desired movies alongside the desirable blockbusters. With the ruling now repealed, it would appear studios can go back to the idea.

In theory, no regulations in place could mean little is stopping a major studio from buying a chain of theaters to showcase only movies from the studio. At it stands now, Disney already owns Hollywood's El Capitan while Netflix owns both a theater in Manhattan and The Egyptian in Los Angeles.

District Court Judge Analisa Torres said in a 17-page opinion, "Given this changing marketplace, the Court finds that it is unlikely that the remaining Defendants would collude to once again limit their film distribution to a select group of theaters in the absence of the Decrees and, finds, therefore, that termination is in the public interest."

It's estimated that half of all theaters are currently owned by three chains — AMC, Cinemark, and Regal. Because of that, Judge Torres says, it's unlikely studios will be unable to take advantage of monopolistic practices.

"In today’s landscape, although there may be some geographic areas with only a single one-screen theater, most markets have multiple movie theaters with multiple screens simultaneously showing multiple movies from multiple distributors," the opinion adds. "There also are many other movie distribution platforms, like television, the internet and DVDs, that did not exist in the 1930s and 40s. Given these significant changes in the market, there is less danger that a block booking licensing agreement would create a barrier to entry that would foreclose independent movie distributors from sufficient access to the market."