What’s On: US plans to change movie rules for the big screen

MIDDLE RIVER, Md.—On a moon-filled Saturday night, D. Edward Vogel stood in the screening room of the Bengies Drive-In Theater, surveying a field of cars that turned out for a cold November triple feature.

“How many think we should go back to ‘Bohemian Rhapsody’ next week? Turn on your headlights,” Mr Vogel said over the audio system during an intermission. Several cars did.

The Bengies, owned by the Vogel family since it opened in suburban Baltimore in 1956, retains the decor and atmosphere of that era, with vintage trailers and a nightly rendition of the national anthem. Mr. Vogel, 60, does his own negotiations with movie studios for what he will show each week. “There’s less wiggle room than ever,” he said, with studios pushing for ever more favorable terms. “We’re on pins and needles to book movies.”

These days, his worries extend to Washington, D.C., where the Justice Department is considering whether or not to remove legal executive orders that have governed film distribution and limited studio leverage for 70 years, ever since the Supreme Court dismantled Hollywood’s monopoly on the movie industry. . The executive orders largely prevent studios from owning movie theaters or imposing onerous conditions on theaters, such as setting minimum ticket prices or requiring screen time for the entire list of movies from a studio.

“I was a bit upset about all of this,” Mr. Vogel said.

“We’re stuck on pins and needles booking movies,” said Mr. Vogel, whose family has owned the Bengies Drive-In Theater since it opened in 1956.


Photo:

TJ Kirkpatrick for The Wall Street Journal

The Justice Department’s review of the so-called Paramount Executive Orders, named after the main defendant in the case, is the most high-profile part of a larger push to end past antitrust legal deals. by the time. Unlike modern settlements, which expire after a limited period, many earlier decrees had no end date and remain on the books.

Go to the movies: 1948

Seeing a movie usually meant going to a one-screen palace.


Photo:

Underwood Archives/UIG/Everett Collection

  • A few movies that year:
  • Key Largo (Warner Bros.)
  • Abbott and Costello meet Frankenstein (universal)
  • Sorry, wrong number (Paramount)
  • Easter Parade (MGM)
  • Large studios:
  • Paramount Pictures
  • Warner Bros.
  • 20th century fox
  • Pictures of RKO
  • MGM
  • (The executive orders also covered Universal Pictures, Columbia Pictures and United Artists)

The department has proposed ending dozens of settlements, including those involving markets for typewriters, horseshoes and ice cream cones.

The department has yet to decide whether to ask a court to overturn or change the motion picture executive orders, but it noted that the motion picture industry has changed a lot since the court battles of the 1930s and 1940s, when most cinemas were single-screen palaces and consumers. didn’t watch movies on TV, let alone on streaming services like Netflix.

“We must not ignore the fact that there have been significant technological and business changes affecting the way American consumers watch movies and the way filmmakers distribute those movies,” said the antitrust chief of the Department of Justice, Makan Delrahim. “We want to make sure that these government decrees do not impede competition.”

The Supreme Court’s successful 1948 decision in US v. Paramount Pictures covered the nation’s eight major motion picture distributors and dismantled a Hollywood machine that allowed the studios to control the motion picture industry from start to finish.

In addition to broadly banning studios from owning the theaters where their movies are shown, he said they could not require theaters to show many or none of their movies, an all-or-nothing deal known as ” bulk booking”. And that ended some industry practices that limited when and how films could be screened in particular areas.

After the decision, each studio entered into an executive order with the Justice Department setting out the new rules. The movie industry flourished, with more than 40,000 screens operating in the United States and Canada.

Go to the movies: 2018

Today, if films are even viewed in cinemas, it is usually a large complex with several screens.


Photo:

Patrick T. Fallon/Bloomberg News

  • Some movies this year:
  • Black Panther (Disney)
  • A Star Is Born (Warner Bros.)
  • BlackkKlansman (Universal)
  • Bohemian Rhapsody (Fox)
  • Large studios:
  • Paramount Pictures
  • Warner Bros.
  • 20th century fox
  • Walt Disney Co. (being acquired from Fox)
  • Sony Pictures Entertainment (bought Columbia in 1989)
  • Universal images

Most of these theaters, of course, are not family operations. About half are controlled by the three largest exhibitors – AMC Entertainment Holdings Inc.,

Regal Entertainment Group and Cinemark Holdings Inc.

Many smaller operators are struggling to hang on, and they say the end of the Paramount Executive Orders could be a final blow.

Five of the current six major studios – Warner Bros., Paramount Pictures, Sony Pictures Entertainment, Universal Pictures and 20th Century Fox – are bound by the executive orders; only Walt Disney Co.

which was not a juggernaut in 1948, is not.

The strength of Paramount’s rules has eroded somewhat over time. The studios were able to purchase a small number of theaters, and some defendants affected by the ruling, such as RKO Pictures, no longer exist. Newer studios such as STX Entertainment have signed distribution deals with theaters generally not permitted by the Executive Orders.

Then there is the emergence of Netflix Inc. and Amazon.com Inc.,

who produce original films and can completely bypass the big screens.

Movie theater owners, including Mr. Vogel, submitted a barrage of comments to the Justice Department this fall, saying eliminating the executive orders could seriously hurt the movie industry. The National Association of Theater Owners, which represents both chains and independents, said removing the block booking ban could give studios even more power to capitalize on their big-budget films, which are essential to cinemas’ bottom line.

This year, three movies alone — “Black Panther,” “Avengers: Infinity War” and “The Incredibles 2” — accounted for more than $2 billion in domestic ticket sales. Theaters say if studios can force them to take their less desirable titles with such blockbusters, it could crowd out films from indie companies like A24, the upstart studio behind such films as “Moonlight” and “Hereditary.”

The Writers Guild of America West says giving more power to dominant studios would reduce competition, leaving writers “with fewer jobs and consumers with fewer choices for what to see in theaters.”

No studio has publicly weighed in on the Justice Department’s review, but major studios in recent years have considered advocating for the executive orders to be lifted, according to two distribution executives.

Studio executives privately say they’re looking forward to the day when they’re no longer forced to give theaters a “window” of exclusivity, which will prevent films from accessing home services like iTunes or the video on demand for approximately 90 days. Under current conditions, if the major exhibitors do not obtain such an agreement, they can refuse to screen the film.

It’s a tough time for independent theaters. While ticket sales are expected to hit a record high this year thanks to higher prices, attendance is stagnating and studios are chasing a higher percentage of the box office on major releases.

The dwindling supply of films has tipped the balance of studio power. In 2017, the six major studios released an average of 14 films each, up from 23 in 2002.

Mr Vogel said he needed reasonable financial terms and flexibility to show films from a range of distributors, principles that are at the heart of the Paramount deal.

“It’s extremely difficult for us to survive,” he said, “and distributors know that.”

Chip Slagle, of Silver Spring, Maryland, and his daughters watch a movie at the Bengies Drive-In Theater in November.


Photo:

TJ Kirkpatrick for The Wall Street Journal

Write to Brent Kendall at [email protected] and Erich Schwartzel at [email protected]

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Alfonso E. Cramer