Monopoly Oligopoly Panoply

“America vs Paramount Pictures (1948)” –

Certain theatre chains would only show films produced by the studio that owned them and this integrated system created an oligopoly, where power is only held by a few institutions. It was also a monopoly as they controlled 95% of the industry and there was little to no chance for others to break into the market.

Due to this major control, the US government began an anti-trust case against the major film studios in 1938 which became recognised as America vs Paramount as they were the largest of the pictures studios and was therefore the primary defendant, although all 8 studios were involved as defendants.

The case was settled in 1940 and required all studios to follow 4 new rules: the big 5 were not allowed to block book short films along with the main films so as to reduce losses; they couldn’t block book theatres with just their own films; the theatres not owned by major studios couldn’t the forced to take whatever films the studios were offering; and they had to create an administration board to enforce these rules.

However, all major studios failed to follow the new rules which resulted in the America vs Paramount case being opened in 1948 at the Supreme Court, where the defendants lost and were forced to sell all their theatres. With a rising TV popularity growing in America and declining ticket sales, some studios got sold off with the 1950’s being a decade of great decline for the golden age of Hollywood.