Without the Paramount Decrees to keep studios in line, consumers are feeling the negative effects of vertical integration.
A year and change after Paramount Global and Skydance Media completed their $8 billion merger to become the Paramount Skydance Corporation, the newly formed corporation reportedly submitted at least three unsuccessful bids to purchase Warner Bros. Discovery. Paramount’s leadership has since deemed the process “unfair,” claiming that Netflix received better treatment during the negotiation process. Netflix eventually won the bid for Warner Bros. days later. Regardless of where you fall on the divide, both outcomes of this deal spell doom for the consumer. We could be living in a timeline where one company operates both Warner Bros. and Paramount Pictures film studios, a multitude of TV channels (including HBO, Nickelodeon, MTV, CBS, TNT, Discovery, etc.), two massive streaming services in Paramount+ and HBO Max, as well as two of the most trusted news organizations, CBS News and CNN. This aggressive style of corporate consolidation should fill you with dread, especially if you are already disgusted with how down right mid our options have become.
Recently, film director Joseph Kahn—who has worked on everything from the Eminem-produced 2017 battle rap flick Bodied to music videos for many popular hip-hop and R&B acts of the mid-to-late 1990s—broke down what’s been happening in the industry and why it doesn’t feel like studios are putting in much effort anymore. In short: They don’t have to. In large part, that’s due to the Department of Justice reversing its decision on the monopoly film studios used to have on movie production and the theater distribution system.
Simply put, things were done differently in Hollywood during the early 1900s. A studio like Paramount Pictures, for example, owned the entire filmmaking process, from the writers, actors, and directors to the facilities used to process the film and the theaters showing the completed films. It’s easy to see the issues with that setup, with Hollywood studios having their hands in roughly 17 percent of theaters in America by 1945. These deals removed the power of independent curation from theater owners, and in turn gave viewers no choice—whatever the movie studio decided to make would ultimately end up on most screens. In 1938, the U.S. Department of Justice sued the Big Five movie companies (Paramount, MGM, Warner Bros., 20th Century Fox, and RKO Pictures, as well as Universal Pictures, Columbia Pictures, and United Artists). That case was settled in 1940, with studios agreeing to stop practices such block booking wherein theaters were forced to buy a multitude of movies without knowing about them, limiting the number of films they were allowed to block-book, and other agreements. Still, the studios tried to worm their way out of the settlement, even proposing a “Unity Plan” with their own revisions. The case was resumed in 1943, and by 1948 the U.S. Supreme Court declared that studios would need to completely divest from the movie theater industry. Over time, when lawyers needed an example of the dangers of vertical integration, they would cite “the Paramount decision” (later known as the Paramount Decrees, which were enacted to force the split of companies that produced the movies and companies that distributed them to consumers). This opened the doors for independent theater owners to make their own decisions about what to play, based on their own metrics and tastes.
That is, until August of 2020, when the Paramount Decrees entered their two-year termination process. There had been attempts to revise the Decrees (or stamp out some Decrees altogether) dating back to the Reagan era, but it wasn’t until 2019 that attempts to remove the Decrees ramped up. Part of that has to do with the rise of technology. The way services like Netflix work, you can watch a movie anywhere—your PS5, your Google Pixel 10, and your MacBook Air are all just as capable of watching a film as hitting up your local AMC or Regal. What’s the point of the Paramount Decrees, the DOJ argued, when the ease of tech makes the idea of monopolizing screens moot? This may sound great for the company selling the product, but for the consumer, it can create something akin to the limp, slop-fueled content ecosystem we are currently wading our way through.
The key to the Paramount Decrees is people’s choice. Moviegoers vote with the almighty dollar on what they want to see, just like they vote with their almighty Nielsen ratings or VOD purchases on what TV shows are worth it. To paraphrase Shadow Henderson in Mo’ Better Blues, as long as Hollywood made the movies people liked, the people would hit the theaters. But when COVID-19 shut down the world, it also crippled the theater system, as you kind of need people in the seats to make money. Theater windows were shortened, allowing you to see Hollywood’s latest offerings on Prime 30-45 days after their theatrical run. It was the perfect time for the DOJ to deem the Paramount Decrees “obsolete,” which has thus morphed into the terrible, horrible, no-good, very-bad content phase we currently find ourselves in. And it all truly started when studios began implementing the Netflix model.
The idea made good financial sense at first. Why license shows like “The Office” and “Friends” to Netflix when studios that own those shows can just start their own streaming services? Filling said services was easy when you have a stellar back catalog to upload, but the real game became these services, like Netflix, producing exclusive new content. Of course, they ignored the fact that not every Netflix Original becomes a “Stranger Things”—hell, HBO keeps trying to make “Game of Thrones” happen again with hopes of hooking the zeitgeist. Most of the time, a new series is good, glazed, sliced, devoured, and discussed within days of its release. Why? Because, by design, it’s on to the next one. Rinse and repeat.
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As Kahn explains, the real cost-saving expense for these streaming services is, oddly enough, creating said exclusive content. “Why license an indie movie for $10–20 million,” he wrote, “when you can spend that and more on an in-house project that keeps 100 % of the upside, strengthens your IP library, and is guaranteed top-of-app promotion?” Again, literally the Netflix model. Over the years, Netflix has strategically attempted to dominate every lane from its stacked catalog of Netflix Original movies and shows to stand up comedy where it dropped one special per week for an entire year to its forays into sports, reality TV, and documentaries that showed it was very intent on dominating every corner of the entertainment industry. None of that speaks to actual risk-taking or quality control; it’s more about expansion and domination. And that’s what you—dear viewer and reader—are likely experiencing. You’re likely frustrated by the glut of weak content filling up the services. Shows and movies made not because the streaming service or studio believes they are qualitatively superior, but because they simply satisfy a data point and will slow down the churn of users. All of which makes it more difficult for independent voices and novel, groundbreaking stories to be made and seen.
If you’ve been frustrated with the massive amount of series and films at the ready for you to stream that are straight-up cheeks, thank the DOJ, as the walking back of the Paramount Decrees successfully made a bad situation worse for the consumer. And, like many things these days, it will likely only get worse before it (hopefully) gets better. In the meantime, just pray your favorite television series aren’t being re-uploaded with revealing 4K transfers!
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