Before Paramount, big studios either had relationships with theaters or owned them outright. That was part and parcel of the entire moviemaking process, which also bound actors, writers, and directors to studios in often exploitative contracts: Everything, from scripting to postproduction to distribution, was under one umbrella. In 1938, the U.S. government sued every major studio for violating antitrust laws, naming the largest (Paramount) as the chief defendant but also bundling in giants such as MGM, Warner Bros., 20th Century Fox, Universal, and Columbia, all of which still exist in some form.
The suit didn’t include Walt Disney Studios, today the most colossal film company of the bunch, because Disney didn’t function at the time as a distributor (it mostly relied on the now-defunct RKO Pictures to put out its animated movies). But even Disney has abided by the rules laid down in the Paramount decision. “Block booking,” a practice that forced independent theaters to agree to screen a studio’s entire upcoming slate of films, sight unseen, was constricted. Studios were required to show films to theaters at special trade screenings, rather than insisting on “blind buying.” Most important, studios had to divest themselves of all theater chains.
Paramount upended the business for more than 20 years, and was the beginning of the end for the classic studio system that powered Hollywood’s golden age. The decision led to the flourishing of independent theaters, arthouse cinema, and foreign films. In the 1970s, the modern blockbuster model took hold with movies such as The Godfather and Jaws, and the current system, in which multiplexes mostly show major releases and smaller studios rely on independent theaters, settled into place.
It’s unlikely that the DOJ striking down Paramount will suddenly turn back time for Hollywood. For one thing, the theater business isn’t the guaranteed profit-maker it used to be. Ticket sales have been erratic for years, and companies such as AMC depend heavily on big grosses. Online companies such as Netflix have been at war with major chains over strict “windowing” requirements that demand a three-month wait between theatrical release and online availability, a stalemate that shows no sign of resolution.
But if a company like Disney were to buy a major theater company—something the impending DOJ change would permit—it could have drastic consequences for Hollywood. Disney already controls an alarmingly large portion of ticket revenues and just bought its competitor 20th Century Fox; since doing that, the company has quietly restricted repertory showings of old Fox movies, a practice it has long enforced for Disney movies. A hypothetical Disney-owned theater chain that prioritized Disney films for its screens would squeeze an industry that’s already struggling to offer a breadth of options to consumers, thanks to the overwhelming success of family-friendly brand-name blockbusters.