United States v. Paramount Pictures, Inc.

United States v. Paramount Pictures, Inc., 334 US 131 (1948) (also known as the Hollywood Antitrust Case of 1948 or the Paramount Case) was a landmark United States Supreme Court anti-trust case that decided the fate of movie studios owning their own theatres and holding exclusivity rights on which theatres would show their films. It would also change the way Hollywood movies were produced, distributed, and exhibited. The Court held in this case that the existing distribution scheme was in violation of the antitrust laws of the United States, which prohibit certain exclusive dealing arrangements.

Background

The legal issues originated in the silent era, when the Federal Trade Commission began investigating film companies for potential violations under the Sherman Antitrust Act of 1890.

Ultimately, the main issue of monopolization would be the reason behind all the major movie studios being sued in 1938 by the U.S. Department of Justice. The case reached the U.S. Supreme Court ten years later. The verdict went against the studios, forcing all of them to divest themselves of their movie theater chains.

The consequences

The court orders forcing the separation of motion picture production and exhibition companies are commonly referred to as the Paramount Decrees. Paramount was forced to sell its own theater chain, which merged with the American Broadcasting Company (led by former United Paramount Theaters boss Leonard Goldenson for decades). Today, the former Paramount theaters are controlled by another theater chain, National Amusements, through its control of Viacom. Despite these mergers, it seems unlikely that a vertically integrated motion picture business will ever be revived in the U.S.

Consequences of the decision include:

• More independent producers and studios to produce their film product free of major studio interference.
• the end of the old Hollywood studio system and, effectively, The Golden Age of Hollywood.