Judge Rules Movie Studios Can Now Buy Movie Theater Chains

With home streaming of theatrical-intended movies on our minds — Disney+, HBO Max and Peacock — one may have overlooked the longtime movie distribution federal restriction -- which now may be over.

A federal judge has granted a Justice Dept. motion to end the Paramount Consent Decrees -- the 1948 rulings prohibiting movie studios from owning movie theaters.

This has given a big boost to movie theater chain stocks -- which have been pounded over the last several months, due to pandemic-related theater closures.

AMC Entertainment, Cinemark Holdings, Imax, Marcus, as well as related in-theater advertising business National CineMedia, all witnessed rising stock prices on Friday, after the decision came down.



Part of the logic here comes amid the sharply rising usage in connected TV, digital media and other new distribution methods of entertainment. It's make the marketplace more competitive.

Additionally, the judge ruled there is less danger now that a movie studio would block-book its films in theaters it would own or that movie studios would look to work together -- collude, to some -- to arrange film release dates.

U.S. District Court Judge Analisa Torres writes: “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.” 

For a long time, big media content producers owning distribution channels -- vertical integration -- has been a subject of financial viability, antitrust concerns and other issues.

This has come up for decades around TV networks owning TV stations, as well as owning cable TV systems and other distributors.

Even then, vertical media integration of any type can be tough to get to work well.

Comcast Corp., for example, took over a decade to get to a good operating approach with NBCUniversal. AT&T, in buying Time Warner, DirecTV is still figuring out how these companies work within its sometimes unwieldy corporate structure, according to analysts.

Add in recent pandemic-related moves by NBCU’s Universal Pictures and Walt Disney to shift major intended theatrical movies -- “Trolls World Tour” and “Mulan,” respectively, to streaming platforms.

All this wasn’t necessarily connected with the Department of Justice November 2019 move to end the decrees.

Suffering movie chains must be thinking, is this the real Hollywood ending -- or will there be a troubling sequel in the works?

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