I’ve been thinking about the end of the Paramount decrees and how movie distribution in the U.S. will drastically change as a result. The key is to think not about law but about power. (long thread) https://variety.com/2019/biz/news/paramount-decrees-end-makan-delrahim-1203408484/

The default assumption has been that the studios—including Netflix—will rush to do things the decrees prohibited, like buy lots of theaters or return to block-booking—forcing theaters to take groups of movies. I think this is mistaken as a matter of economics and of control.

The DOJ made it clear that if the studios behave particularly egregiously, they will face new litigation. I think that threat is empty. (It’s still Trumpworld; still a Republican DOJ; still a world where antitrust is largely a figment).

But I also think that media companies are the one place where Trumpian erratic behavior has turned into threats of antitrust enforcement. The upshot is that studios will be cautious.

Will studios buy theaters? Sure, some. But Paramount was ALWAYS allowed to buy theaters and the other studios were given the green light during the Reagan years, as Stephen Prince details in A New Pot of Gold. They dipped their toes and got out. It wasn’t worth it.

Overseas, beyond the reach of U.S. antitrust enforcement, studios kept their theaters. (Ross Melnick has been unearthing this fascinating history.) There, too, they got into and out of the business as they saw fit and as local conditions changed.

Are things different now than in 1984? OTOH: No. The theater business is still tough, and there’s no reason to buy the theater if you can squeeze the profit out of it elsewhere along the value chain.

What’s more, being good at running theaters means being in the real estate business and retail. Why, if you think the future lies with streaming, would you want to get deeper into the physical side of the business? Keep that risk on someone else's balance sheet.

OTOH: Yes. You might want theaters if you were less interested in maximizing theatrical profit than in maximizing studio control. And one reason you might want control is because theaters aren’t letting you do something you really, really want to do.

Similarly, do studios want block booking? There are some advantages. You might be able to demand a bigger percentage of the gross. But if that demand is too high, then theater owners will be much worse off, and they will tip into bankruptcy.

This is the DOJ’s logic in allowing vertical integration: you won’t kill the goose that exhibits your movies. Delrahim highlighted the *horizontal* conspiracy behind the original decrees; conservative antitrust thinkers don't believe *vertical* integration is anticompetitive.

There are also disadvantages block-booking: you can end up making more movies “profitable,” and that hurt you. It might be better to make massive hits and modest flops than lots of doubles when it comes time to cut participation checks.

What is more, the history of block booking assumed that it was bad because it forced theaters to show movies they wouldn’t want. But for studios trying to understand their business it was a very blunt instrument and it scrambled the signal about how much a particular movie made.

One advantage to owning your own theaters is that you can know EXACTLY how much a movie made, and when. Cathy Jurca and John Sedgwick have done great work on the Warner theaters in Philly in the 30s.

Today, there is much, much more granular information about movie performance and audience expectations, and studios can react quickly. Block booking is a step backward into a world where theatrical exhibition tells you LESS about each movie individually since they are bundled.

Block booking would thus be anathema to Netflix or Apple or ATT or Disney, which would much prefer to know where your eyeballs are at every moment.

Again, the effect of the change in the law is not about permission; it's about power. So what do studios really, really want? They want to destroy “the window,” the delay between theatrical and home releases. They have been nibbling away at it for years with only limited success.

The end of the Paramount decrees gives the studios the leverage to compel theaters to shorten the window or give it up. Sure, studios can and will buy some theaters—good ones in big cities, in all likelihood. Sure, they can and will threaten to return to block booking.

And once they’ve scared the shit out of the theater owners, the studios can agree not to do any of the things they’ve threatened to do if theater owners will only give up a little more of the window. Which the theater owners will, eventually.

Are the two sides of this threat calculation equal? Is the threat of block booking the same as the threat to the window? No, so don’t expect the window to vanish overnight. Studios don't want to overplay their hand; theater solidarity is strong.

But the world of exhibition will be far more precisely managed, where each movie will have its own release pattern in each market, down to the theater and maybe even the screening. Movies will vanish from theaters and be streaming more quickly.

The new movie landscape won't be a nostalgic throwback to Classical Hollywood. The result will be a truly hybrid movies-and-tv system, one suited to an age of enormous, emboldened production-distribution-and-even-exhibition conglomerates fascinated with data.

A month ago, the "old guard" of ComcastNBCU, ATTWarner, DisneyFox, Sony and the "new players" Netflix, Amazon, Apple held nearly all the power; the end of the Paramount decrees offers them whatever they lacked. They will take it.