While making plans for the legal decimation of the Paramount Decree, the current Presidential Administration is making plans for engaging with various social media companies for supposed anti-trust violations. Hollywood and the antitrust laws have a long and bitter history. Anti trust suits have shaped the development of the motion picture industry as a whole. In order to re-state the importance of the anticipated removal of the Paramount decree, I thought I would revisit a little Hollywood history and how the threat of anti-trust molded this business to what it has become today.
In my younger days, I really got a kick out of working in Hollywood. This was a magical place full of dreams and dreamers. I later discovered that in reality it was a pit of vipers bloated by corruption and rampant egos. It was fun, but not very real on reflection still I am glad I had the experience. One of the interesting things was getting to eat at Wolfgang Puck’s restaurant, Spago’s.
Spagos was perched overlooking the Sunset Strip next to probably the world’s best record store Tower Records. Wolfgang Puck established the restaurant in 1982 with his wife and it quickly became the Hollywood go to spot. It was entrenched in the mythos of Hollywood. When I went there, I was not disappointed. As I walked I noticed sitting at the center table was Kirk Douglas in a blue leisure one piece jumper and a tall thin man with a shock of white hair with the world’s biggest pair of glasses perched precariously on his face, it was Lew Wasserman, former head of MCA Universal. I was shocked, here was a man who re-shaped the movie business in its entirety, for better or worse. Frankly I stood there for a second staring.
Lew Wasserman was born to a Jewish family in Cleveland, Ohio He began his show business career as an usher in a Cleveland theater in 1933. He later became a booking agent for the Music Corporation of America (MCA), founded by optometrist Dr. Jules Stein. Wasserman soon gained managerial control of MCA, expanding into representing actors and actresses in addition to musicians. In the process, Wasserman created the star system. Wasserman’s sole goal in the star system was to gain more revenue for his clients and therefore a bigger commission for himself and his firm. As a talent agency, Wasserman’s MCA came to dominate Hollywood, representing such stars as Bette Davis and Ronald Reagan.
MCA started Revue Productions in 1943 for the purpose of broadcasting radio productions to the troops over seas during the war. The produced the popular “Stage Door Canteen.” They also produced USO shows and tours.
During the 1950’s, Revue turned its attention to producing television programming. Popular among their shows were “Leave it to Beaver’,” Wagon Train,” “The Adventures of Kit Carson,” “Alfred Hitchcock Presents,” and many others. The Revue logo became familiar at the end of many popular shows.
By controlling the talent they controlled the industry.
By 1960, Wasserman’s agency grew to the point where MCA would be called the Octopus by other agencies and studios as a result of its ability to touch almost every aspect of the motion picture industry. At one time Wasserman and his agency, through Revue Productions, controlled nearly 50% of all television due to the agency’s ability to control the talent that starred in the shows. In 1962, the Justice Department, under Attorney General Robert Kennedy began antitrust proceedings against the MCA. Wasserman was indignant rallying the unions which owed so much to him to MCA’s defense. These unions represented 20,000 people employed in the movie business. The Department of Justice gave Wasserman two choices, give up the talent agency or give up the production side of the business.
On the advice of legal counsel, Wasserman and MCA agreed to give up control of its talent agency and keep the rest of its entertainment business, including Universal Pictures that it had recently acquired as a result of the merger with MCA-DECCA. The MCA talent agency accounted for only $8.5 million of the company’s net income in 1961, compared with rather lush profits of more than $72 million from its production efforts. In 1961-62 $72 million would be the equivalent of $585 million in 2018. Wasserman was bitter after his fight with Washington and decide dthat if you could not beat Washington well maybe then maybe you could buy it.
But the battle with the Justice Department convinced Mr. Wasserman of the need to involve Hollywood deeply in politics to safeguard its interests and MCA’s profits. Wasserman’s ardent fund-raising for the Democratic Party made him a Beltway favorite. At one time, Lyndon Johnson went so far as to offer him the position of Secretary of Commerce. Lew Wasserman politely declined the offer, but instead put another plan into play. Wasserman in 1966 he twisted the limber arm of gentleman Jack Valenti, a Washington insider and a close Johnson aide, to become president of the Motion Picture Association of America. The rest as they say is history.
As the Paramount Decree sought to level the playing field for motion picture industry, since it’s implementation, the studios have sought ways to counter the impact of the decrees. The studios now created industry pressures by the MPAA’s rating system and massive political lobbying in order to ensure that it still can control the fate of this business.
As the Department prepares for the dispatch of the Paramount Decree, another chapter unfolds. Silver Cinemas are four independent movie theaters in Washington DC, Denver, and Detroit who want to show art films, but they collectively allege that they have been deeply hurt by the anti-competitive practices of the largest player in the arthouse market, Landmark Theaters. Landmark owns 51 arthouses in 22 markets all around the country. Silver Cinemas allege, Landmark is using a practice known as “circuit dealing” to obtain wide “clearances” in its license agreements with distributors, in violation of Section One of the Sherman Act. It basically restricts access to movies other than Landmark. Plaintiffs also claims that Landmark is monopolizing the arthouse film market, in violation of Section Two of the Sherman Act, by currently holding monopoly power and using leverage to stymie other theaters in this space. What is kind of interesting is that these are the exact same claims that Landmark mace in 2016 when it sued Regal Entertainment Group.
I firmly believe in the phrase “what is past is prologue”, history is repeating itself and we, as an industry, should remember what has taken place in order to plan for a future.
