US Justice Dept. May Enforce Rule Threatening Theater Profits

[imsounoriginal]

U.S. movie theater chains fear Justice Department review may hit profits

WASHINGTON (Reuters) - U.S. movie theater chains fear that a Justice Department review of little-known mid-century rules may result in studios getting free rein to force them to show unpopular movies in exchange for getting blockbuster releases, threatening their profits.

Before the rules went into effect, studios commonly sold multiple films to theaters as a package. The U.S. Supreme Court in 1948 ruled against the practice, called “block booking,” and others that favored studios, leading the plaintiff, Paramount Pictures, Inc, and its peers to sign consent decrees over the next few years with the Justice Department that banned such deals.

The department announced in August it was reviewing some 1,300 such decrees affecting a range of industries, which have no expiration date, with an eye toward cancelling them.

The agreements regulating relations between movie studios and theaters, which the industry calls the Paramount consent decrees, were reached in the late 1940s and early 1950s when movie theaters had just one screen, televisions were not universal, and online streaming was decades into the future.

“They’ll be able to get more of their duds played in your theaters,” said Brian Fridley, whose father started Iowa-based Fridley Theatres in the 1930s. “If you’re forced to play the less popular films, that’s going to eat up your profits. Maybe all your profits.”

Fridley said his chain of 20 movie theaters and 86 screens might be forced to show poor performers like 21st Century Fox’s “The Darkest Minds.” The dystopian teen movie made $13 million in the United States, compared with $700 million for “Black Panther,” according to Box Office Mojo.

Box office sales bring in a good chunk of theater revenues, even as viewers increasingly watch movies on television and online. For example, Viacom Inc (VIAB.O), which owns Paramount, said in an annual report that movies shown in theaters brought in 25 percent of its filmed entertainment revenues for 2017, while home entertainment brought in 26 percent and licensing brought in 40 percent.

The National Association of Theatre Owners (NATO), which represents movie theater companies with 33,000 screens across the United States, urged the department to forbid movie studios to return to the practice of block booking.

Justice Department officials believe the fears are overblown because it is not in studios’ financial interest to force theaters to show poor performing films, according to a person familiar with the government’s thinking.

The Motion Picture Association of America declined to comment, referring Reuters to the studios. The six biggest U.S. film studios are Warner Bros, owned by AT&T (T.N); 21th Century Fox, which is selling its movie studio to rival Walt Disney Co (DIS.N); Paramount; Universal Pictures, which is owned by Comcast Corp (CMCSA.O); and Sony Pictures.

The biggest U.S. movie theater companies include AMC Entertainment (AMC.N), Regal Entertainment owned by Britain’s Cineworld (CINE.L) and Cinemark (CNK.N).

All of the studios and major movie theater companies either declined to comment or did not respond to requests for comment.

[shinobipopcorn]

It needs to be looked into. In other words, said ruling forbade studios from owning muvie theaters. (read https://en.m.wikipedia.org/wiki/Unit..._Pictures,_Inc.) But that is essentially pointless now, since studios can own streaming providers and cable channels. Who cares if they don't own theaters anymore. ATT owns HBO now, look what's happening to Dish subscribers.

[imsounoriginal]

Yeah this seems like much ado about nothing, but I enjoy seeing the theater chains squirm.

[ctujackbauer]

Muh AMC stock is down today bros. This is not good, not good at all...

(I was up like 20% just a few days ago)

[Vandal Savage]

Another aspect of this is that a giant like Disney could effectively use weaponized block-booking agreements to keep competitors out of theaters, no?

[BluBonnet]

Might be an underhanded way to put more pressure on China. (AMC Theaters, the world's largest theater chain, is now Chinese-owned)

[thecooldud]

If it means smaller movies get more of a look-in, that sounds like a good thing. "Unpopular" movies are never gonna be popular if no bugger'll show 'em just because they're not the latest Marvel movie...

[phobicsquirrel]

Too bad the government wont stop the buying of major studios by other large studios...

[ctujackbauer]

Originally Posted by BluBonnet

Might be an underhanded way to put more pressure on China. (AMC Theaters, the world's largest theater chain, is now Chinese-owned)

Not true anymore. Dailan Wanda sold a very large portion of its AMC stake due to China's new rules on foreign ownership. Wanda owns about 38% of AMC shares, class A and B. Before this, AMC was essentially paying out a massive dividend to Wanda.

There was a special dividend to US common shareholders a few months ago.

Can read more about it here:
https://www.businesswire.com/news/ho...gic-Investment

[Zombo]

I could go either way on this...

I personally would love to see some of these less popular films get into theaters more often than not.

Theater chains make tons of profit on their food alone. This will just force theater chains to build additions to their theaters to house more small screens.

Sounds good to me...

Multiplex's will turn into Citiplex's. Maybe build up rather than out in current locations.

Either that or they will just charge less for those films.

The only thing that is going to kill theaters is the home theater market, if studios start releasing their films sooner. That isn't going to happen any time soon.

[ltb2.0]

Block booking was abolished in the 50's. Besides the least popular movies are gone pretty fast at my location. The All time record was Norm of the North which lasted 3 days.

And I have seen no evidence of block booking, in fact I have seen just the opposite.

[WestMan]

It's going to be hard to go against The Supreme Court here....

Doubt much will change.

[Jay Ellis]

Originally Posted by thecooldud

If it means smaller movies get more of a look-in, that sounds like a good thing. "Unpopular" movies are never gonna be popular if no bugger'll show 'em just because they're not the latest Marvel movie...

Yeah, maybe movies like Suspiria will start being shown in my home town. This sounds like a plus to me.

[Monterey Jack]

Every "small" movie should get at least two or three weeks in ALL theaters, not just a handful in L.A. and New York. If you have eighteen screens, you can free up one or two of them for these alternatives to the latest Disney Empire product.

[RCRochester]

Just curious, if this "block booking" has been illegal since the 50s, why is it that every mention of the movie The Other Side of Midnight is accompanied by the trivia that if theatre owners wanted to show it, they were were forced to also show Star Wars?

[klauswhereareyou]

Why would Disne....I mean the movie industry ever want to do this?