1 00:00:04,400 --> 00:00:07,800 Speaker 1: Welcome to Tech Stuff, a production from I Heart Radio. 2 00:00:12,520 --> 00:00:15,640 Speaker 1: Hey there, and welcome to tech Stuff. I'm your host, 3 00:00:15,800 --> 00:00:19,160 Speaker 1: Jonathan Strickland. I'm an executive producer with I Heart Radio 4 00:00:19,200 --> 00:00:21,759 Speaker 1: and I love all things tech. And a while back, 5 00:00:22,160 --> 00:00:24,920 Speaker 1: I did some episodes in which I mentioned off hand 6 00:00:25,079 --> 00:00:28,880 Speaker 1: a Supreme Court decision in the United States that laid 7 00:00:28,880 --> 00:00:31,360 Speaker 1: down the law when it came to movie studios and 8 00:00:31,480 --> 00:00:34,640 Speaker 1: theater chains. And lately I've been thinking about this again 9 00:00:34,800 --> 00:00:38,680 Speaker 1: as we see movie studio has become part of much larger, 10 00:00:38,840 --> 00:00:43,800 Speaker 1: multibillion dollar communications companies. And then when I decided to 11 00:00:43,800 --> 00:00:46,559 Speaker 1: do this episode, I found to my surprise that the 12 00:00:46,560 --> 00:00:50,520 Speaker 1: Supreme Court decision from decades ago, like eighty years ago, 13 00:00:51,040 --> 00:00:54,840 Speaker 1: was dissolved earlier in and somehow I had never even 14 00:00:54,920 --> 00:00:57,480 Speaker 1: heard about it. So today I want to talk about 15 00:00:57,520 --> 00:01:02,800 Speaker 1: the production and distribution side of entertainment, specifically when it 16 00:01:02,840 --> 00:01:08,200 Speaker 1: comes to motion pictures. This discussion involves technology, politics, and business, 17 00:01:08,200 --> 00:01:10,400 Speaker 1: and it also ties into other stuff that we've talked 18 00:01:10,440 --> 00:01:14,080 Speaker 1: about in recent episodes, like the problem with anti competitive 19 00:01:14,120 --> 00:01:18,640 Speaker 1: practices and monopolies. So let's get started by going back 20 00:01:18,680 --> 00:01:22,720 Speaker 1: to the early days of film and theaters. Films have 21 00:01:23,040 --> 00:01:28,960 Speaker 1: always been a convergence of technology, business, and art. Sometimes 22 00:01:29,000 --> 00:01:32,320 Speaker 1: one or two of those three points might be emphasized 23 00:01:32,360 --> 00:01:36,119 Speaker 1: more than another. So for example, you might argue that 24 00:01:36,319 --> 00:01:40,080 Speaker 1: a big budget action film could lean heavily on business 25 00:01:40,160 --> 00:01:43,399 Speaker 1: and tech, but maybe go a little light on the 26 00:01:43,600 --> 00:01:46,160 Speaker 1: art part of the triangle. Or you might have a 27 00:01:46,200 --> 00:01:49,440 Speaker 1: really low budget arthouse film that's really heavy on the 28 00:01:49,560 --> 00:01:52,360 Speaker 1: art and kind of light on the tech, and you 29 00:01:52,400 --> 00:01:54,880 Speaker 1: wonder who the heck even agreed to fund the thing 30 00:01:54,920 --> 00:01:57,920 Speaker 1: in the first place. But I think generally speaking, most 31 00:01:57,960 --> 00:02:01,720 Speaker 1: movies have these three factors, and on measure, we're going 32 00:02:01,760 --> 00:02:05,160 Speaker 1: to leave art out of this, as it is subjective 33 00:02:05,280 --> 00:02:08,280 Speaker 1: and up to the interpretation of each person. There's probably 34 00:02:08,280 --> 00:02:12,160 Speaker 1: someone out there who objects to me dismissing most big 35 00:02:12,200 --> 00:02:15,520 Speaker 1: budget action films, for example. But the tech and business 36 00:02:15,520 --> 00:02:19,200 Speaker 1: sides are woven together in a really snug way. For 37 00:02:19,280 --> 00:02:22,640 Speaker 1: one thing, if you invent a technology, you have the 38 00:02:22,639 --> 00:02:27,400 Speaker 1: opportunity to file for a patent describing how that technology works. 39 00:02:28,000 --> 00:02:31,839 Speaker 1: Patents are useful because they provide you some protection for 40 00:02:31,880 --> 00:02:34,720 Speaker 1: your idea. On the one hand, you have to spell 41 00:02:34,720 --> 00:02:38,560 Speaker 1: out how your invention works, at least on a high level, 42 00:02:39,040 --> 00:02:41,320 Speaker 1: and you do that in a document that the patent 43 00:02:41,360 --> 00:02:44,480 Speaker 1: office makes available to anyone who wants to see how 44 00:02:44,480 --> 00:02:48,040 Speaker 1: that technology works. But on the other hand, in return 45 00:02:48,240 --> 00:02:52,119 Speaker 1: for agreeing to have your ideas publicly available, you get 46 00:02:52,160 --> 00:02:55,680 Speaker 1: protection for those ideas. If someone else tries to make 47 00:02:55,760 --> 00:02:59,480 Speaker 1: a you know, whatever it is you made without your permission, 48 00:02:59,840 --> 00:03:03,320 Speaker 1: you can file a lawsuit for patent infringement, and if 49 00:03:03,360 --> 00:03:07,120 Speaker 1: you can prove that they in fact violated your patent 50 00:03:07,560 --> 00:03:11,680 Speaker 1: by creating a competing product based on your design, a 51 00:03:11,760 --> 00:03:15,240 Speaker 1: court can make them stop and perhaps award you compensation, 52 00:03:15,720 --> 00:03:18,600 Speaker 1: which would be paid by the accused, assuming that they 53 00:03:18,680 --> 00:03:21,840 Speaker 1: can pay it now. One of the important things about 54 00:03:21,880 --> 00:03:26,520 Speaker 1: patents is that they expire, and once they do, anyone 55 00:03:26,800 --> 00:03:30,560 Speaker 1: can make a technology based off that patent without having 56 00:03:30,560 --> 00:03:33,280 Speaker 1: to get the permission from the patent holder. Because the 57 00:03:33,280 --> 00:03:37,120 Speaker 1: patent itself has expired, it's in the public domain. So 58 00:03:37,640 --> 00:03:40,280 Speaker 1: a patent grants you a limited amount of time to 59 00:03:40,640 --> 00:03:44,680 Speaker 1: profit from your ideas. At that time, you can do 60 00:03:44,760 --> 00:03:47,560 Speaker 1: so without the fear of someone else swooping in and 61 00:03:47,680 --> 00:03:52,200 Speaker 1: using your ideas without your permission, and you can grant permission. 62 00:03:52,320 --> 00:03:55,120 Speaker 1: Typically we see that in the form of licensing agreements. 63 00:03:55,640 --> 00:03:59,119 Speaker 1: So you come up with a really cool technology. Someone says, hey, 64 00:03:59,320 --> 00:04:02,320 Speaker 1: I would love to use that how much And the 65 00:04:02,360 --> 00:04:04,320 Speaker 1: two of you come to an agreement on how much 66 00:04:04,360 --> 00:04:06,720 Speaker 1: money they pay you in return for being able to 67 00:04:06,840 --> 00:04:10,080 Speaker 1: use your patented technology. At least that's how it's supposed 68 00:04:10,120 --> 00:04:14,720 Speaker 1: to work. The alternative to patents is just keeping your 69 00:04:14,720 --> 00:04:18,480 Speaker 1: technology as hidden and secret as possible. This would be 70 00:04:18,560 --> 00:04:22,120 Speaker 1: the trade secret strategy. It's it's one you don't want 71 00:04:22,160 --> 00:04:25,280 Speaker 1: to share because it would give up a competitive edge 72 00:04:25,560 --> 00:04:28,719 Speaker 1: in whatever market you're working in. The danger with trade 73 00:04:28,760 --> 00:04:31,680 Speaker 1: secrets is that if someone susses out how you made 74 00:04:31,720 --> 00:04:35,000 Speaker 1: your technology, if they reverse engineer it, you don't really 75 00:04:35,000 --> 00:04:38,160 Speaker 1: have any protection against them copying you. If I make 76 00:04:38,160 --> 00:04:40,760 Speaker 1: I'll watch him a jig, and I don't patent any 77 00:04:40,800 --> 00:04:43,159 Speaker 1: of my designs, and you figure out how it all works, 78 00:04:43,560 --> 00:04:45,360 Speaker 1: you can make your own watch him a jig, and 79 00:04:45,480 --> 00:04:47,839 Speaker 1: I'm out of luck. Really now. The reason I even 80 00:04:47,839 --> 00:04:51,240 Speaker 1: bring this up is that, in the early early days 81 00:04:51,240 --> 00:04:54,240 Speaker 1: of film, and we're talking like nineteen o eight, a 82 00:04:54,320 --> 00:04:58,800 Speaker 1: group of motion picture companies, some of the most you know, 83 00:04:58,839 --> 00:05:01,360 Speaker 1: some of the earliest ones in the assistance along with 84 00:05:01,680 --> 00:05:05,240 Speaker 1: Eastman Kodak, which was the chief supplier of film stock 85 00:05:05,760 --> 00:05:08,279 Speaker 1: because this was you know, when films were actually shot 86 00:05:08,320 --> 00:05:12,279 Speaker 1: on film. And then a film distributor named George Klein 87 00:05:12,720 --> 00:05:16,120 Speaker 1: all banded together to create an organization called the Motion 88 00:05:16,279 --> 00:05:21,159 Speaker 1: Picture Parent Company or mp PC. This was out of 89 00:05:21,200 --> 00:05:24,919 Speaker 1: necessity because one member of that company, that would be 90 00:05:24,920 --> 00:05:29,479 Speaker 1: the Edison Manufacturing Company named after Yes, Thomas Edison, was 91 00:05:29,600 --> 00:05:33,200 Speaker 1: making life really difficult for the other companies. See Thomas 92 00:05:33,320 --> 00:05:36,120 Speaker 1: Edison was famous for a few different things. One was 93 00:05:36,279 --> 00:05:41,400 Speaker 1: inventing stuff. Two was being a really shrewd businessman. Three 94 00:05:41,480 --> 00:05:43,880 Speaker 1: was that he built up a company that he filled 95 00:05:43,920 --> 00:05:48,640 Speaker 1: with engineers who invented stuff too, and when they patented 96 00:05:48,720 --> 00:05:51,360 Speaker 1: those inventions, Thomas hays and always made sure his name 97 00:05:51,400 --> 00:05:54,000 Speaker 1: was also on the patents, which is part of why 98 00:05:54,040 --> 00:05:56,839 Speaker 1: he has so many hundreds and hundreds of patents to 99 00:05:56,960 --> 00:06:01,120 Speaker 1: his name. And four he was fierce you protective of 100 00:06:01,200 --> 00:06:05,440 Speaker 1: his patented technology. If he suspected that some other company 101 00:06:05,640 --> 00:06:09,080 Speaker 1: was making use of his patented tech without a proper license, 102 00:06:09,480 --> 00:06:14,080 Speaker 1: he would file lawsuits, lots of them. Well. The other 103 00:06:14,160 --> 00:06:18,000 Speaker 1: members of what would become the Motion Picture Parent Company 104 00:06:18,080 --> 00:06:21,000 Speaker 1: were film studios that Edison had kind of sued on 105 00:06:21,120 --> 00:06:24,520 Speaker 1: multiple occasions and really The purpose of this new entity 106 00:06:24,640 --> 00:06:28,320 Speaker 1: was to work out some licensing agreements to pool patents together, 107 00:06:29,000 --> 00:06:32,880 Speaker 1: so that way, when it came to stuff like film cameras, projectors, 108 00:06:32,960 --> 00:06:36,760 Speaker 1: and the various processes used in making movies on a 109 00:06:36,839 --> 00:06:41,599 Speaker 1: technical level, there was this agreement. Now, there was also 110 00:06:41,680 --> 00:06:46,039 Speaker 1: a holdout company called Biograph. That company had its own 111 00:06:46,160 --> 00:06:49,960 Speaker 1: camera technology that didn't sit well with Edison because he 112 00:06:50,040 --> 00:06:53,720 Speaker 1: wanted to have the corner on that market. So Edison 113 00:06:53,800 --> 00:06:56,640 Speaker 1: was really hoping he could push them out of business. 114 00:06:57,160 --> 00:07:00,760 Speaker 1: But Biograph wisely went and purchased the rights to another 115 00:07:01,040 --> 00:07:04,719 Speaker 1: key patent in the film process, which gave the company 116 00:07:04,839 --> 00:07:08,320 Speaker 1: enough leverage to force its way into mp PC as well. 117 00:07:08,880 --> 00:07:12,560 Speaker 1: So there were a lot of strange bedfellows, I guess 118 00:07:12,560 --> 00:07:15,760 Speaker 1: you could call them now. Before the mp PC, the 119 00:07:15,800 --> 00:07:18,920 Speaker 1: standard procedure between studios and theaters went something like this. 120 00:07:19,360 --> 00:07:22,680 Speaker 1: A theater owner would decide which films they wanted to 121 00:07:22,720 --> 00:07:26,360 Speaker 1: play in their theater, and they would purchase a film print, 122 00:07:26,760 --> 00:07:29,560 Speaker 1: So in other words, they would purchase a copy of 123 00:07:29,720 --> 00:07:34,080 Speaker 1: a film from a studio uh and the studio would 124 00:07:34,120 --> 00:07:38,280 Speaker 1: make copies from a master and then sell the copies 125 00:07:38,280 --> 00:07:40,920 Speaker 1: to theaters, and then the theaters would just hold on 126 00:07:41,000 --> 00:07:43,720 Speaker 1: to that copy because they had purchased it, or they 127 00:07:43,800 --> 00:07:46,520 Speaker 1: might just you know, throw it away if they didn't 128 00:07:46,520 --> 00:07:49,160 Speaker 1: hold onto it, but it was theirs. But the mp 129 00:07:49,320 --> 00:07:53,360 Speaker 1: PC would change that. They switched it to a rental agreement. 130 00:07:53,440 --> 00:07:56,160 Speaker 1: So now theaters would pay a certain amount of money 131 00:07:56,200 --> 00:07:58,600 Speaker 1: to get a copy of a film for a set 132 00:07:58,640 --> 00:08:01,000 Speaker 1: amount of time. After that set amount of time, they 133 00:08:01,000 --> 00:08:04,160 Speaker 1: would have to return the copy or they would have 134 00:08:04,160 --> 00:08:06,920 Speaker 1: to rent it again. And this gives studios a bit 135 00:08:07,000 --> 00:08:10,440 Speaker 1: more quality control over film prints because they could dispose 136 00:08:10,560 --> 00:08:12,560 Speaker 1: of any prints that had a lot of wear and 137 00:08:12,600 --> 00:08:15,280 Speaker 1: tear on them. And you know, films, the physical medium, 138 00:08:15,280 --> 00:08:17,320 Speaker 1: it does wear down over time, so that this was 139 00:08:17,360 --> 00:08:20,320 Speaker 1: important and it was good business because it meant that, 140 00:08:20,440 --> 00:08:24,320 Speaker 1: you know, audiences wouldn't associate a particular studio with poor 141 00:08:24,400 --> 00:08:27,280 Speaker 1: quality film. If in fact that copy was starting to 142 00:08:27,320 --> 00:08:29,360 Speaker 1: break down, they could swap it out for something new. 143 00:08:30,040 --> 00:08:33,520 Speaker 1: The mp PC was also a trust or you know, 144 00:08:33,559 --> 00:08:37,720 Speaker 1: a monopoly. Eastman Kodak held the rights to produce film stock, 145 00:08:38,200 --> 00:08:41,960 Speaker 1: and other companies could license that technology from Kodak, or 146 00:08:42,360 --> 00:08:44,440 Speaker 1: you could have someone try and come up with a 147 00:08:44,440 --> 00:08:47,920 Speaker 1: total alternative to Kodak film and the typical film stock, 148 00:08:48,400 --> 00:08:50,160 Speaker 1: but that would also mean you would have to have 149 00:08:50,200 --> 00:08:53,079 Speaker 1: an alternative form of camera and a projector as well, 150 00:08:53,120 --> 00:08:55,839 Speaker 1: so that was not, you know, a small task. So 151 00:08:56,040 --> 00:08:58,920 Speaker 1: the mp PC set it up where Kodak would only 152 00:08:59,000 --> 00:09:02,679 Speaker 1: sell film stock to the companies that were inside the 153 00:09:02,800 --> 00:09:07,240 Speaker 1: mp PC. The trust also held the camera and projector rights, 154 00:09:07,360 --> 00:09:09,320 Speaker 1: and so all of this meant that anyone who wanted 155 00:09:09,320 --> 00:09:12,560 Speaker 1: to get into the filmmaking side of business had to 156 00:09:12,559 --> 00:09:15,720 Speaker 1: be a part of the mp PC, or they would 157 00:09:15,760 --> 00:09:18,920 Speaker 1: have no legal means to get hold of the equipment 158 00:09:18,960 --> 00:09:21,640 Speaker 1: and film that they needed to make movies. But as 159 00:09:21,640 --> 00:09:25,880 Speaker 1: I mentioned earlier, patents expire, and by nineteen thirteen, the 160 00:09:26,040 --> 00:09:30,319 Speaker 1: mp PC no longer had the cudgel of patent infringement 161 00:09:30,400 --> 00:09:35,280 Speaker 1: lawsuits to knockdown competitors. In addition, the mp PC was 162 00:09:35,440 --> 00:09:38,280 Speaker 1: located on the east coast of the United States in 163 00:09:38,360 --> 00:09:43,480 Speaker 1: New Jersey, that's Thomas Edison's stomping Grounds, and several upstart 164 00:09:43,559 --> 00:09:47,240 Speaker 1: motion picture companies would set up operations way out west 165 00:09:47,280 --> 00:09:51,240 Speaker 1: in the world of Hollywood Land, which made it mighty 166 00:09:51,320 --> 00:09:55,360 Speaker 1: inconvenient to investigate the possibility of patent infringement and hanky panky. 167 00:09:55,640 --> 00:09:57,480 Speaker 1: So that's on the on the other side of the nation. 168 00:09:57,559 --> 00:10:00,520 Speaker 1: And and then the death blow came. The United States 169 00:10:00,559 --> 00:10:05,040 Speaker 1: government brought an antitrust lawsuit against the mp PC in 170 00:10:05,160 --> 00:10:08,960 Speaker 1: nineteen fifteen. The government claimed that the actions that the 171 00:10:09,000 --> 00:10:12,920 Speaker 1: company had taken were anti competitive and it wasn't just 172 00:10:13,080 --> 00:10:15,240 Speaker 1: the actions of a company trying to protect its own 173 00:10:15,280 --> 00:10:19,040 Speaker 1: intellectual property, and as a result, the mp PC would 174 00:10:19,080 --> 00:10:21,679 Speaker 1: dissolve just a couple of years later. So that's our 175 00:10:21,679 --> 00:10:25,640 Speaker 1: first example of a monopolistic strategy in the film distribution world, 176 00:10:25,760 --> 00:10:28,360 Speaker 1: and it won't buy any stretch be the last one. 177 00:10:28,760 --> 00:10:31,760 Speaker 1: The law of the U. S Government enforced against the 178 00:10:31,920 --> 00:10:35,600 Speaker 1: mp PC is called the Sherman Act. It's one of 179 00:10:35,640 --> 00:10:39,400 Speaker 1: the foundational antitrust laws in the United States, and in fact, 180 00:10:39,400 --> 00:10:41,560 Speaker 1: it was passed all the way back in eighteen ninety 181 00:10:41,640 --> 00:10:43,800 Speaker 1: is part of an effort to deal with issues stemming 182 00:10:43,800 --> 00:10:48,200 Speaker 1: from powerful monopolies and cartel's, largely in industries like steel 183 00:10:48,400 --> 00:10:52,760 Speaker 1: and railroad, among a few others. The government found that 184 00:10:53,080 --> 00:10:55,840 Speaker 1: mp PC was in violation of Section one of the 185 00:10:55,840 --> 00:11:00,120 Speaker 1: Sherman Act, and that section states that quote, every contract 186 00:11:00,280 --> 00:11:03,840 Speaker 1: combination in the form of trust or otherwise, or conspiracy 187 00:11:03,920 --> 00:11:07,400 Speaker 1: in restraint of trade or commerce among the several states 188 00:11:07,520 --> 00:11:11,680 Speaker 1: or with foreign nations is declared to be illegal. End quote. 189 00:11:12,280 --> 00:11:14,040 Speaker 1: Section two of the Sherman Act is the part that 190 00:11:14,080 --> 00:11:18,040 Speaker 1: really prohibits the monopolization of interstate trade or commerce and 191 00:11:18,640 --> 00:11:21,800 Speaker 1: makes it a felony to to do so. While mp 192 00:11:21,800 --> 00:11:26,120 Speaker 1: PC was crumbling, a new movie studio Powerhouse was taking shape. 193 00:11:26,559 --> 00:11:28,640 Speaker 1: And someday I'm going to have to do a full 194 00:11:28,840 --> 00:11:32,559 Speaker 1: episode on this company because it has a fascinating and 195 00:11:33,040 --> 00:11:36,160 Speaker 1: important history. But it all started off with the merger 196 00:11:36,240 --> 00:11:40,680 Speaker 1: of two other companies. First was the Famous Players Film Company, 197 00:11:40,920 --> 00:11:44,800 Speaker 1: which in itself was originally called Famous Players in Famous 198 00:11:44,840 --> 00:11:47,679 Speaker 1: Plays the early days of films sometimes referred to movies 199 00:11:47,720 --> 00:11:51,560 Speaker 1: as plays. And second was the Feature Play Company, which 200 00:11:51,600 --> 00:11:54,840 Speaker 1: was founded by a guy named Jesse L. Laski, and 201 00:11:54,880 --> 00:11:59,320 Speaker 1: the merged company would become Famous Players Last Key Company. UH. 202 00:11:59,400 --> 00:12:02,559 Speaker 1: It would later on merge with a film distribution company 203 00:12:02,720 --> 00:12:07,200 Speaker 1: with the more familiar name of Paramount Pictures Corporation. Along 204 00:12:07,240 --> 00:12:10,920 Speaker 1: the way, the organization acquired several more independent film companies, 205 00:12:10,960 --> 00:12:12,920 Speaker 1: and it would lead to an approach and filmmaking and 206 00:12:12,920 --> 00:12:16,320 Speaker 1: distribution that would become a big headache for the industry 207 00:12:16,400 --> 00:12:19,280 Speaker 1: and the United States government down the line, and the 208 00:12:19,320 --> 00:12:22,960 Speaker 1: actual merger process was actually a really sneaky one. So 209 00:12:23,040 --> 00:12:27,000 Speaker 1: you got Adolph Zukor, he's the founder of Famous Players 210 00:12:27,160 --> 00:12:30,679 Speaker 1: Film Company, and then Jesse Laski, and they both entered 211 00:12:30,679 --> 00:12:34,840 Speaker 1: into distribution deals with Paramount Pictures Corporations. So originally this 212 00:12:34,960 --> 00:12:38,760 Speaker 1: wasn't you know, a merger, that was just a business deal. 213 00:12:39,520 --> 00:12:43,240 Speaker 1: And the guy who founded the Paramount Pictures Corporation was 214 00:12:43,320 --> 00:12:47,679 Speaker 1: William Wadsworth Hodkinson, and he was serving the president as 215 00:12:47,679 --> 00:12:51,320 Speaker 1: president of the company. But then Laski and Zuker thought, hey, 216 00:12:51,360 --> 00:12:54,439 Speaker 1: you know, if we were able to distribute our own movies, 217 00:12:55,160 --> 00:12:57,959 Speaker 1: we wouldn't have to share revenues with a distributor. It 218 00:12:58,000 --> 00:13:01,120 Speaker 1: would all be our own revenue. So instead of paying 219 00:13:01,200 --> 00:13:05,000 Speaker 1: this this guy to distribute our films, wouldn't it be 220 00:13:05,000 --> 00:13:07,640 Speaker 1: better if we just got hold of those assets and 221 00:13:07,679 --> 00:13:10,160 Speaker 1: we did it ourselves and thus got to keep all 222 00:13:10,200 --> 00:13:12,920 Speaker 1: the money. So they set about doing a hostile takeover. 223 00:13:13,080 --> 00:13:15,240 Speaker 1: This is what we would call it in the hades. 224 00:13:15,679 --> 00:13:19,160 Speaker 1: And sometimes I see Hodgkinson listed as a founder of 225 00:13:19,200 --> 00:13:22,640 Speaker 1: the movie studio Paramount Pictures Corporation, and it is true. 226 00:13:22,679 --> 00:13:26,079 Speaker 1: He founded the distribution side of the company, but he 227 00:13:26,240 --> 00:13:29,240 Speaker 1: was not involved with it as a movie studio. Because 228 00:13:29,400 --> 00:13:33,520 Speaker 1: Laski and Zooker bought enough shares to influence the board 229 00:13:33,559 --> 00:13:38,040 Speaker 1: of directors of Paramount Pictures to have Hodginson ousted as president, 230 00:13:38,720 --> 00:13:42,000 Speaker 1: then they were able to buy the company because they 231 00:13:42,080 --> 00:13:44,880 Speaker 1: essentially had the board of directors in their pocket. So 232 00:13:44,920 --> 00:13:47,680 Speaker 1: they said, hey, board of directors, wouldn't it be cool 233 00:13:47,720 --> 00:13:50,040 Speaker 1: if we bought your company? And they said, yes, because 234 00:13:50,200 --> 00:13:53,880 Speaker 1: you own us. And so they brought Paramount Pictures under 235 00:13:53,880 --> 00:13:56,960 Speaker 1: the fold and they made this a true force and 236 00:13:57,000 --> 00:13:58,840 Speaker 1: film and like I said, I have to do a 237 00:13:58,840 --> 00:14:02,680 Speaker 1: full episode or maybe two, maybe three about Paramounts history 238 00:14:02,679 --> 00:14:04,680 Speaker 1: and movies because it really did shape the way the 239 00:14:04,720 --> 00:14:09,160 Speaker 1: film industry works today. Around this time, the various film studios, 240 00:14:09,160 --> 00:14:12,600 Speaker 1: including the future Paramount Pictures, began to create what we 241 00:14:12,679 --> 00:14:17,400 Speaker 1: call the studio system. This system would lockdown film production 242 00:14:17,520 --> 00:14:21,440 Speaker 1: in various ways. For example, studios would engage directors and 243 00:14:21,520 --> 00:14:26,800 Speaker 1: performers and others into long term contracts, so the filmmakers 244 00:14:26,800 --> 00:14:29,520 Speaker 1: and stars wouldn't be full time employees of the studio 245 00:14:29,560 --> 00:14:33,000 Speaker 1: per se, but they would be locked down to exclusive agreements, 246 00:14:33,040 --> 00:14:35,160 Speaker 1: and so certain actors would only be found in a 247 00:14:35,200 --> 00:14:40,080 Speaker 1: particular movie studios films Rudolph Valentino and Gloria Swanson were 248 00:14:40,120 --> 00:14:45,200 Speaker 1: two actors exclusive to famous players Laski. For example, Sometimes 249 00:14:45,520 --> 00:14:48,760 Speaker 1: a studio would negotiate with another studio and they would 250 00:14:48,760 --> 00:14:51,680 Speaker 1: allow one of their stars or directors to work for 251 00:14:51,760 --> 00:14:54,400 Speaker 1: another studio in exchange for a trade of you know, 252 00:14:54,440 --> 00:14:58,200 Speaker 1: perceived equivalent value. But for the most part, people were 253 00:14:58,200 --> 00:15:02,040 Speaker 1: stuck working for a single student video until their contract expired, 254 00:15:02,520 --> 00:15:05,040 Speaker 1: and that would end up being a big part of 255 00:15:05,040 --> 00:15:07,760 Speaker 1: the problem as it would give the creators in Hollywood 256 00:15:07,800 --> 00:15:10,680 Speaker 1: a lot less opportunity to pursue their best deals while 257 00:15:10,760 --> 00:15:13,880 Speaker 1: under contract. So there might be a part that an 258 00:15:13,920 --> 00:15:16,600 Speaker 1: actor would have been perfect for, they just never would 259 00:15:16,600 --> 00:15:18,840 Speaker 1: have had the opportunity to do it because they would 260 00:15:18,840 --> 00:15:21,840 Speaker 1: have been locked in with a competing studio. Now, the 261 00:15:21,880 --> 00:15:24,680 Speaker 1: second big part of the studio system was the vertical 262 00:15:24,760 --> 00:15:28,640 Speaker 1: integration approach. So we can think of there being three 263 00:15:28,680 --> 00:15:32,080 Speaker 1: major components in the film industry. There are producers. There's 264 00:15:32,160 --> 00:15:36,160 Speaker 1: the studios that actually you know, make films. There are distributors. 265 00:15:36,320 --> 00:15:38,440 Speaker 1: These are the companies that arranged for prints of a 266 00:15:38,440 --> 00:15:41,280 Speaker 1: film to go to theaters. And then there are the 267 00:15:41,320 --> 00:15:45,000 Speaker 1: exhibitors or the theaters themselves. And then you've also got 268 00:15:45,040 --> 00:15:48,440 Speaker 1: you know, other parties involved, like film stock companies like Kodak, 269 00:15:48,840 --> 00:15:52,080 Speaker 1: which play a part two. But the producers, distributors and 270 00:15:52,280 --> 00:15:55,400 Speaker 1: exhibitors are what we're really focusing on. In the eyes 271 00:15:55,440 --> 00:15:58,040 Speaker 1: of the government. These three groups were meant to be 272 00:15:58,560 --> 00:16:02,440 Speaker 1: separate from one another, but Famous Players Last Sky changed 273 00:16:02,440 --> 00:16:06,240 Speaker 1: this by going with a vertical integration approach. With the 274 00:16:06,320 --> 00:16:10,080 Speaker 1: sniping of Paramount Pictures Corporation, Zukor and Laski checked off 275 00:16:10,120 --> 00:16:13,280 Speaker 1: the distribution box, and they also began to buy up 276 00:16:13,400 --> 00:16:17,640 Speaker 1: theaters in various markets. This activity attracted the attention of 277 00:16:17,680 --> 00:16:21,520 Speaker 1: the US Federal Trade Commission, or FTC in the early 278 00:16:21,640 --> 00:16:27,800 Speaker 1: nineteen twenties. In the FTC charged the company with conspiracy 279 00:16:27,880 --> 00:16:32,200 Speaker 1: and restraint of trade, essentially arguing that the company was 280 00:16:32,320 --> 00:16:35,120 Speaker 1: violating the Sherman Act. When we come back from break, 281 00:16:35,280 --> 00:16:38,480 Speaker 1: we'll talk about how that unfolded, how the Great Depression 282 00:16:38,640 --> 00:16:42,520 Speaker 1: complicated matters, how a movie trade organization would become part 283 00:16:42,560 --> 00:16:45,240 Speaker 1: of this mess, and how things would get a whole 284 00:16:45,280 --> 00:16:56,600 Speaker 1: lot worse. But first, let's take a quick break among 285 00:16:56,640 --> 00:17:00,240 Speaker 1: the problems that the FTC found with Famous Players Last Ski, 286 00:17:00,480 --> 00:17:03,520 Speaker 1: and I should point out that other studios were doing 287 00:17:03,560 --> 00:17:08,320 Speaker 1: the same thing. Were some industry strategies that were particularly unfair. 288 00:17:08,960 --> 00:17:12,240 Speaker 1: One was called block booking, and here's how it would work. 289 00:17:12,800 --> 00:17:17,760 Speaker 1: Studios were locking down stars in these long term contracts. 290 00:17:17,800 --> 00:17:20,000 Speaker 1: So audiences would begin to fall in love with some 291 00:17:20,080 --> 00:17:23,639 Speaker 1: of these stars, and they wanted to see the pictures 292 00:17:23,680 --> 00:17:26,760 Speaker 1: the movies that these stars were in. Theater owners would 293 00:17:26,760 --> 00:17:29,280 Speaker 1: want to run films with those stars in them in 294 00:17:29,400 --> 00:17:32,639 Speaker 1: order to attract crowds and sell tickets. And so the 295 00:17:32,720 --> 00:17:36,440 Speaker 1: movie studios who controlled the stars would say to the 296 00:17:36,440 --> 00:17:40,760 Speaker 1: theater owners, Okay, I'll lease to you a print of 297 00:17:40,800 --> 00:17:43,320 Speaker 1: this film with the stars that you want in it, 298 00:17:43,720 --> 00:17:47,600 Speaker 1: but in return, you also have to promise to rent 299 00:17:47,640 --> 00:17:51,000 Speaker 1: and exhibit these dozen other movies starring folks that nobody 300 00:17:51,040 --> 00:17:53,800 Speaker 1: really cares about. Otherwise you don't get the good stuff. 301 00:17:54,160 --> 00:17:57,200 Speaker 1: And when I say dozen, that's not an exaggeration. In fact, 302 00:17:57,400 --> 00:17:59,760 Speaker 1: some block booking would be up to a hundred and 303 00:18:00,000 --> 00:18:03,560 Speaker 1: four films, which was a year's worth of movies in 304 00:18:03,640 --> 00:18:07,200 Speaker 1: one go. And this practice is called block booking. Theater 305 00:18:07,240 --> 00:18:10,679 Speaker 1: owners were being pushed to rent out entire blocks of 306 00:18:10,760 --> 00:18:14,240 Speaker 1: films if they wanted to exhibit an anticipated film in 307 00:18:14,320 --> 00:18:17,600 Speaker 1: their theaters, so it was saying, if you want this one, 308 00:18:17,640 --> 00:18:21,200 Speaker 1: you also have to take all these other ones. In addition, 309 00:18:21,359 --> 00:18:24,200 Speaker 1: block booking would affect the variety of movies that theater 310 00:18:24,280 --> 00:18:26,840 Speaker 1: owners could show. If you're running a theater that has 311 00:18:26,840 --> 00:18:29,879 Speaker 1: a single screen, as many theaters had back in the 312 00:18:29,920 --> 00:18:33,000 Speaker 1: early days, there are really only so many different movies 313 00:18:33,040 --> 00:18:36,320 Speaker 1: you can exhibit in a week, and if your agreement 314 00:18:36,359 --> 00:18:39,240 Speaker 1: with Studio A means you have to take you know, 315 00:18:39,359 --> 00:18:42,320 Speaker 1: a dozen or more of their films, that might be 316 00:18:42,440 --> 00:18:46,480 Speaker 1: all you can show. You could presumably pay the studios 317 00:18:46,520 --> 00:18:50,080 Speaker 1: for all these movies but not actually show them, and 318 00:18:50,160 --> 00:18:53,840 Speaker 1: opt instead to also deal with Studio B. But then 319 00:18:53,880 --> 00:18:56,560 Speaker 1: you're wasting money, right because you're spending money to rent 320 00:18:56,560 --> 00:19:00,880 Speaker 1: out blocks of films that you never show, you only 321 00:19:00,880 --> 00:19:03,680 Speaker 1: show a couple of them. That makes it much harder 322 00:19:03,720 --> 00:19:06,159 Speaker 1: to make your money back as an exhibitor, and the 323 00:19:06,200 --> 00:19:09,320 Speaker 1: exhibitors were over a barrel on this one, as were 324 00:19:09,359 --> 00:19:11,879 Speaker 1: the directors and stars. In fact, you could argue that 325 00:19:11,920 --> 00:19:14,800 Speaker 1: the only party to really benefit from this arrangement would 326 00:19:14,840 --> 00:19:18,960 Speaker 1: be the studios. Another practice the FDC found questionable was 327 00:19:19,000 --> 00:19:23,280 Speaker 1: called blind booking or sometimes called pre selling. So with 328 00:19:23,359 --> 00:19:26,439 Speaker 1: this approach, theaters would agree to pay studios up front 329 00:19:26,840 --> 00:19:29,960 Speaker 1: to rent film prints of movies that hadn't even been 330 00:19:30,000 --> 00:19:33,840 Speaker 1: made yet, and these could often be lumped in with 331 00:19:33,880 --> 00:19:37,200 Speaker 1: the block booking. So you might get a deal where 332 00:19:37,240 --> 00:19:40,359 Speaker 1: you're dealing with Paramount, for example, and Baramount tells you, 333 00:19:40,359 --> 00:19:42,639 Speaker 1: all right, we'll give you will We'll let you rent 334 00:19:42,680 --> 00:19:44,960 Speaker 1: this one film, but you have to agree to rent 335 00:19:45,000 --> 00:19:47,919 Speaker 1: these one and three other movies, and a lot of 336 00:19:47,920 --> 00:19:51,280 Speaker 1: them haven't even been shot yet. If you have watched 337 00:19:51,320 --> 00:19:53,639 Speaker 1: a movie about the Golden Age of Hollywood, you may 338 00:19:53,640 --> 00:19:56,399 Speaker 1: have seen some sort of parody of this, where you know, 339 00:19:56,440 --> 00:19:59,320 Speaker 1: a film has its director and its cast, and maybe 340 00:19:59,320 --> 00:20:02,520 Speaker 1: even has a ooster for the movie, but the film 341 00:20:02,560 --> 00:20:05,280 Speaker 1: doesn't have a script and no one has shot a 342 00:20:05,359 --> 00:20:09,639 Speaker 1: foot of film yet. Barton Fink has a scene that 343 00:20:09,800 --> 00:20:12,639 Speaker 1: specifically sends this up. Well, that kind of stuff was 344 00:20:12,680 --> 00:20:16,400 Speaker 1: actually happening, and again exhibitors were being pressured to play 345 00:20:16,440 --> 00:20:18,880 Speaker 1: ball and pay up without a chance to even see 346 00:20:18,920 --> 00:20:21,199 Speaker 1: the film first, often because there was no film to 347 00:20:21,400 --> 00:20:24,240 Speaker 1: see if they hope to get the movies that their 348 00:20:24,240 --> 00:20:26,879 Speaker 1: customers were willing to pay for. And as I mentioned, 349 00:20:26,880 --> 00:20:31,520 Speaker 1: earlier studios were also buying up theaters or building theaters 350 00:20:31,560 --> 00:20:35,320 Speaker 1: of their own. The FTC alleged that famous players last 351 00:20:35,359 --> 00:20:37,960 Speaker 1: Kie had even gone so far as to lean heavily 352 00:20:38,119 --> 00:20:41,560 Speaker 1: on a theater owner to sell their movies to or 353 00:20:41,600 --> 00:20:44,320 Speaker 1: to rent their movies too, and if they encountered resistance, 354 00:20:44,359 --> 00:20:46,920 Speaker 1: they would threaten to open up a competing movie house 355 00:20:47,200 --> 00:20:51,000 Speaker 1: in a nearby location, like literally across the street. And 356 00:20:51,040 --> 00:20:54,040 Speaker 1: then after opening up the competition, the studio would undercut 357 00:20:54,080 --> 00:20:57,679 Speaker 1: the prices of the competing theater and would sell tickets 358 00:20:57,680 --> 00:21:01,040 Speaker 1: at a huge loss just to attract customers away from 359 00:21:01,119 --> 00:21:04,760 Speaker 1: the theater owner that had shown resistance and hopefully forced 360 00:21:04,800 --> 00:21:06,720 Speaker 1: them to go out of business as a result. So 361 00:21:06,760 --> 00:21:10,040 Speaker 1: it's a very cutthroat way of doing business. Lumping the 362 00:21:09,920 --> 00:21:13,480 Speaker 1: theaters under studio ownership gave studios even more control of 363 00:21:13,480 --> 00:21:17,520 Speaker 1: which films would play in various regions. Studios could block 364 00:21:17,560 --> 00:21:20,600 Speaker 1: a theater from exhibiting a film from a rival studio. 365 00:21:21,000 --> 00:21:23,879 Speaker 1: The vertical integration was creating a real stranglehold on the 366 00:21:24,040 --> 00:21:27,640 Speaker 1: entire process, and the average American customer had fewer options 367 00:21:27,680 --> 00:21:29,679 Speaker 1: to buy a ticket to the films they really wanted 368 00:21:29,720 --> 00:21:33,520 Speaker 1: to see, so then the FTC comes in and says, hey, 369 00:21:33,240 --> 00:21:36,760 Speaker 1: this doesn't seem fair. It appears that Famous Players Last 370 00:21:36,840 --> 00:21:39,560 Speaker 1: Key is engaged with some anti competitive practices meant to 371 00:21:39,600 --> 00:21:43,440 Speaker 1: restrict other companies from doing business in the film industry. 372 00:21:43,480 --> 00:21:46,240 Speaker 1: But the FTC's pursuit of a judgment against the company 373 00:21:46,320 --> 00:21:49,960 Speaker 1: would take, let's call it, a leisurely path. It wasn't 374 00:21:50,040 --> 00:21:53,240 Speaker 1: until the summer of nineteen twenty seven. Keep in mind, 375 00:21:53,480 --> 00:21:59,359 Speaker 1: this investigation began in the one. It wasn't until that 376 00:21:59,400 --> 00:22:01,920 Speaker 1: the courts a warded the FTCs call for a cease 377 00:22:01,920 --> 00:22:06,000 Speaker 1: and desist order against Famous Players Last Key for practices 378 00:22:06,080 --> 00:22:08,600 Speaker 1: like block booking, and a call for the company to 379 00:22:08,600 --> 00:22:12,280 Speaker 1: stop purchasing theaters. The court ordered Famous Players Last Key 380 00:22:12,359 --> 00:22:16,000 Speaker 1: to comply within sixty days of the judgment or otherwise 381 00:22:16,040 --> 00:22:18,840 Speaker 1: produce a darn good excuse as to why it had 382 00:22:18,920 --> 00:22:22,320 Speaker 1: not yet done so, and the company played for time 383 00:22:22,400 --> 00:22:26,840 Speaker 1: they asked for, and they received extensions on this judgment twice. 384 00:22:27,520 --> 00:22:31,600 Speaker 1: Then in nine, when the stalled tactics were at an end, 385 00:22:31,920 --> 00:22:34,600 Speaker 1: the company claimed it wasn't really guilty of the charges 386 00:22:34,720 --> 00:22:36,840 Speaker 1: after all, at least not the way they had been 387 00:22:36,960 --> 00:22:40,040 Speaker 1: framed in the court case. That did not sit well 388 00:22:40,080 --> 00:22:42,879 Speaker 1: with the f TC, and in the meantime, the Commission 389 00:22:42,960 --> 00:22:46,600 Speaker 1: was expanding its investigations into the movie industry at large, 390 00:22:46,920 --> 00:22:49,600 Speaker 1: with the Famous Players Last Key case at the heart 391 00:22:49,640 --> 00:22:53,000 Speaker 1: of it. The FTC began to escalate its charges against 392 00:22:53,040 --> 00:22:56,560 Speaker 1: movie studios and going for a more direct antitrust case. 393 00:22:57,280 --> 00:23:00,760 Speaker 1: This would ultimately rise to the Supreme Court. The Supreme 394 00:23:00,760 --> 00:23:04,120 Speaker 1: Court would ultimately decide that the practice of block booking 395 00:23:04,280 --> 00:23:08,400 Speaker 1: was inherently anti competitive and thus would be illegal under 396 00:23:08,400 --> 00:23:11,720 Speaker 1: the Sherman Act, and that studios that practice block booking 397 00:23:11,720 --> 00:23:16,080 Speaker 1: would be subject to criminal proceedings and fines. However, at 398 00:23:16,119 --> 00:23:18,520 Speaker 1: the same time, the United States was dealing with the 399 00:23:18,600 --> 00:23:22,320 Speaker 1: Great Depression, which began in October of nineteen twenty nine 400 00:23:22,760 --> 00:23:25,760 Speaker 1: with the stock market crash, and then it got worse 401 00:23:25,840 --> 00:23:30,159 Speaker 1: due to multiple complicating factors. Meanwhile, the film industry was 402 00:23:30,200 --> 00:23:34,000 Speaker 1: actually seeing more competition, not less, but that had to 403 00:23:34,040 --> 00:23:37,119 Speaker 1: do with a technological advance rather than trumped up charges 404 00:23:37,160 --> 00:23:40,040 Speaker 1: against the Famous Players Last Key Company. See. In the 405 00:23:40,119 --> 00:23:43,560 Speaker 1: late nineteen twenties, talking pictures were becoming a thing which 406 00:23:43,560 --> 00:23:46,480 Speaker 1: created a new type of film experience that various studios 407 00:23:46,480 --> 00:23:49,560 Speaker 1: were trying to capitalize on. While simultaneously trying to figure 408 00:23:49,600 --> 00:23:52,040 Speaker 1: out how to salvage the assets that were more suitable 409 00:23:52,080 --> 00:23:54,960 Speaker 1: for silent films. That's a nice way of saying that 410 00:23:55,359 --> 00:23:58,919 Speaker 1: not all directors or actors were equally adept at making 411 00:23:59,240 --> 00:24:02,680 Speaker 1: talking picture as they had been with silent films. But 412 00:24:02,800 --> 00:24:07,840 Speaker 1: the talking pictures revolution would create competition between various studios. Okay, 413 00:24:07,840 --> 00:24:11,040 Speaker 1: to understand what happened next, we need to rewind a 414 00:24:11,080 --> 00:24:14,240 Speaker 1: little bit. As the FTC and famous players last Kie 415 00:24:14,320 --> 00:24:17,439 Speaker 1: were wrestling in the courts, the movie studios as a 416 00:24:17,480 --> 00:24:20,720 Speaker 1: whole were converging. In an effort to protect the industry 417 00:24:20,800 --> 00:24:26,840 Speaker 1: against US government regulation. The studios formed an organization called 418 00:24:27,040 --> 00:24:31,440 Speaker 1: the Motion Pictures Producers and Distributors of America, or the 419 00:24:31,600 --> 00:24:36,280 Speaker 1: mpp d A. This organization would later become the Motion 420 00:24:36,359 --> 00:24:39,240 Speaker 1: Picture Association of America a k a. The m p 421 00:24:39,480 --> 00:24:42,920 Speaker 1: a A until twenty nineteen, when it would turn into 422 00:24:43,040 --> 00:24:47,359 Speaker 1: its final, at least for now, form of Motion Picture 423 00:24:47,440 --> 00:24:51,240 Speaker 1: Association or mp A. The purpose for this trade association 424 00:24:51,520 --> 00:24:54,919 Speaker 1: was to bolster the financial support of Hollywood and to 425 00:24:55,080 --> 00:24:58,960 Speaker 1: encourage investment in the film industry. As part of that strategy, 426 00:24:59,040 --> 00:25:02,159 Speaker 1: the association also took it upon itself to create a 427 00:25:02,200 --> 00:25:05,679 Speaker 1: system to ensure that the films produced in America met 428 00:25:05,720 --> 00:25:09,120 Speaker 1: a strict moral code, the idea being that investors would 429 00:25:09,160 --> 00:25:12,680 Speaker 1: be hesitant to pour money into an industry that had 430 00:25:12,720 --> 00:25:17,040 Speaker 1: a seedy reputation. The first president of this association was 431 00:25:17,080 --> 00:25:20,480 Speaker 1: a man named will H. Hayes, Postmaster General of the 432 00:25:20,560 --> 00:25:24,440 Speaker 1: United States, and the moral code applied to the content 433 00:25:24,600 --> 00:25:27,359 Speaker 1: of films, and it would become known as the Haze Code. 434 00:25:28,080 --> 00:25:31,520 Speaker 1: That in itself is a subject suitable for a full episode, 435 00:25:31,560 --> 00:25:34,639 Speaker 1: though I'm not sure that would fit within the bounds 436 00:25:34,640 --> 00:25:37,479 Speaker 1: of tech stuff. What is important is that at first, 437 00:25:38,000 --> 00:25:41,120 Speaker 1: movie studios paid little mind to the Haze Code. They 438 00:25:41,160 --> 00:25:45,560 Speaker 1: had similarly ignored an earlier set of guidelines that were 439 00:25:45,560 --> 00:25:49,760 Speaker 1: called the don'ts and be carefuls because the mp p 440 00:25:49,920 --> 00:25:53,080 Speaker 1: d A had no real way to enforce the code. 441 00:25:53,560 --> 00:25:56,080 Speaker 1: The studios wanted to use every trick in the book 442 00:25:56,119 --> 00:25:59,520 Speaker 1: to get more butts and seats because the depression was 443 00:26:00,200 --> 00:26:03,199 Speaker 1: really taking a toll on businesses in general, including the 444 00:26:03,200 --> 00:26:07,200 Speaker 1: film industry, so part of that included producing and distributing 445 00:26:07,240 --> 00:26:10,560 Speaker 1: films of what would be considered questionable moral character for 446 00:26:10,600 --> 00:26:14,320 Speaker 1: the time. Today, we'd probably think of it as quaint. However, 447 00:26:15,000 --> 00:26:18,359 Speaker 1: various state governments in the United States began to pass 448 00:26:18,560 --> 00:26:22,520 Speaker 1: censorship laws to protect the delicate citizens of those states 449 00:26:22,880 --> 00:26:26,840 Speaker 1: from seeing such scandalous material, and out of a concern 450 00:26:26,960 --> 00:26:30,239 Speaker 1: that the federal government might get involved. As more and 451 00:26:30,280 --> 00:26:33,439 Speaker 1: more states were taking a heavy hand with censorship, the 452 00:26:33,480 --> 00:26:37,080 Speaker 1: movie industry largely agreed to abide by the Hayes Code, 453 00:26:37,440 --> 00:26:40,840 Speaker 1: and they formed the Production Code Administration or p c 454 00:26:41,119 --> 00:26:44,359 Speaker 1: A to do so, and with the threat of substantial 455 00:26:44,400 --> 00:26:47,800 Speaker 1: fines for any film that failed to adhere to that code, 456 00:26:48,280 --> 00:26:50,520 Speaker 1: provided that the film came from a studio that was 457 00:26:50,560 --> 00:26:53,479 Speaker 1: also part of the mp p d A. But the 458 00:26:53,600 --> 00:26:55,560 Speaker 1: mp p d A would also play a part in 459 00:26:55,600 --> 00:26:59,920 Speaker 1: the battle over anti competitive practices. As a trade association, 460 00:27:00,160 --> 00:27:03,879 Speaker 1: it was tasked with helping studios attain financial stability during 461 00:27:03,880 --> 00:27:07,920 Speaker 1: a depression. That's a tall order, but the US government 462 00:27:07,960 --> 00:27:11,639 Speaker 1: was receptive to suggestions, as the thought was that people 463 00:27:11,760 --> 00:27:16,400 Speaker 1: needed distractions from the hardships of going through an economic depression, 464 00:27:17,000 --> 00:27:19,400 Speaker 1: kind of similar to the way people are talking about, 465 00:27:19,440 --> 00:27:22,360 Speaker 1: you know, dealing with the pandemic, and the film industry 466 00:27:22,640 --> 00:27:25,560 Speaker 1: was a way to provide diversions for a suitably low 467 00:27:25,640 --> 00:27:29,359 Speaker 1: cost per experience, and so, faced with a dilemma, the 468 00:27:29,440 --> 00:27:33,480 Speaker 1: US government agreed to dismiss the whole judgment against stuff 469 00:27:33,520 --> 00:27:36,960 Speaker 1: like block booking if it meant that studios could continue 470 00:27:37,000 --> 00:27:40,880 Speaker 1: to provide entertainment for Americans undergoing a really tough economic time. 471 00:27:41,160 --> 00:27:44,720 Speaker 1: The mp P d A successfully argued that motion pictures 472 00:27:44,760 --> 00:27:48,240 Speaker 1: should be protected under a larger national strategy called the 473 00:27:48,359 --> 00:27:53,120 Speaker 1: National Industrial Recovery Act. In nineteen three, the industry had 474 00:27:53,119 --> 00:27:57,480 Speaker 1: only faced consequences for the vertical integration strategy that it 475 00:27:57,560 --> 00:28:00,880 Speaker 1: had employed for a very short while, and some really 476 00:28:00,880 --> 00:28:04,200 Speaker 1: hadn't faced any consequences yet at all. And so through 477 00:28:04,280 --> 00:28:07,520 Speaker 1: the nineteen thirties, the studio system approach grew more powerful. 478 00:28:07,680 --> 00:28:11,600 Speaker 1: Studios continued to grow and expand their influence. They pushed 479 00:28:11,680 --> 00:28:15,240 Speaker 1: harder into the various components of film production, distribution, and exhibition. 480 00:28:15,640 --> 00:28:19,440 Speaker 1: Things got mighty anti competitive, but the US government saw 481 00:28:19,480 --> 00:28:23,479 Speaker 1: it as unnecessary evil. However, various court cases in different 482 00:28:23,480 --> 00:28:28,240 Speaker 1: industries would ultimately test the National Industrial Recovery Acts constitutional basis, 483 00:28:28,960 --> 00:28:32,600 Speaker 1: and these cases would eventually come before the Supreme Court, 484 00:28:32,960 --> 00:28:36,600 Speaker 1: and in ninety five, the Supreme Court decided that the 485 00:28:36,640 --> 00:28:40,560 Speaker 1: Act was in fact unconstitutional and therefore it would be 486 00:28:40,600 --> 00:28:44,240 Speaker 1: overturned that would remove the protection for the film industry, 487 00:28:44,360 --> 00:28:46,440 Speaker 1: which for a couple of years had really gone hog 488 00:28:46,440 --> 00:28:51,240 Speaker 1: wild with the anti competitive strategies. Pretty Much everyone outside 489 00:28:51,240 --> 00:28:56,960 Speaker 1: of studio executives were unhappy with these anti competitive strategies. 490 00:28:57,240 --> 00:29:00,040 Speaker 1: Directors and actors were unhappy because they couldn't pick and 491 00:29:00,120 --> 00:29:03,200 Speaker 1: choose their projects the way they wanted to. They had 492 00:29:03,280 --> 00:29:07,280 Speaker 1: to respond to studio mandates. Theater owners were unhappy that 493 00:29:07,360 --> 00:29:10,960 Speaker 1: they had to comply with studio wishes and distribution practices. 494 00:29:11,280 --> 00:29:14,720 Speaker 1: The American consumers, while happy to watch movies, weren't being 495 00:29:14,760 --> 00:29:18,160 Speaker 1: well served by the vertical integration approach either, and so 496 00:29:18,360 --> 00:29:21,600 Speaker 1: once the n I r A protection dissolved. Once that 497 00:29:21,680 --> 00:29:24,520 Speaker 1: act was overturned by the Supreme Court, the U. S 498 00:29:24,560 --> 00:29:27,720 Speaker 1: Department of Justice began a renewed legal attack on the 499 00:29:27,760 --> 00:29:31,800 Speaker 1: anti competitive practices of the movie industry. Among the issues 500 00:29:31,840 --> 00:29:35,760 Speaker 1: were not just the vertical integration or block booking or 501 00:29:35,840 --> 00:29:39,800 Speaker 1: blind booking, but also the industry forcing conditions like the 502 00:29:39,920 --> 00:29:43,880 Speaker 1: length of a film's run in theaters and dictating what 503 00:29:44,040 --> 00:29:47,560 Speaker 1: the minimum admission price for a ticket should be in 504 00:29:47,640 --> 00:29:53,960 Speaker 1: distribution contracts. The Department of Justice charged eight defendants, including 505 00:29:54,080 --> 00:29:58,240 Speaker 1: Paramount Pictures. What would follow would be a long series 506 00:29:58,280 --> 00:30:02,040 Speaker 1: of cases and consent decree ease that ultimately resulted in 507 00:30:02,120 --> 00:30:06,040 Speaker 1: the Court finding the process of vertical integration anti competitive. 508 00:30:06,440 --> 00:30:09,320 Speaker 1: The movie studios received a mandate to split up so 509 00:30:09,360 --> 00:30:12,720 Speaker 1: that they would no longer be production studios that also 510 00:30:12,760 --> 00:30:16,520 Speaker 1: controlled exhibition of films. So when we come back, we'll 511 00:30:16,560 --> 00:30:19,080 Speaker 1: talk more about the outcomes of that Supreme Court decision 512 00:30:19,160 --> 00:30:20,920 Speaker 1: and then do a big jump in time to talk 513 00:30:20,960 --> 00:30:25,200 Speaker 1: about how this decision was recently reversed. But first let's 514 00:30:25,200 --> 00:30:36,320 Speaker 1: take another quick break. So eventually, the decision that would 515 00:30:36,840 --> 00:30:40,160 Speaker 1: you know, determine the fate of the film industry for 516 00:30:40,280 --> 00:30:44,160 Speaker 1: eighty years or so, finally came about in nineteen forty six, 517 00:30:44,960 --> 00:30:47,600 Speaker 1: after World War Two. To keep in mind, the original 518 00:30:47,720 --> 00:30:51,200 Speaker 1: decision had been back in nineteen twenty nine, and a 519 00:30:51,240 --> 00:30:55,240 Speaker 1: few factors led into this change. One was that the 520 00:30:55,280 --> 00:30:58,200 Speaker 1: world of nineteen forty six was very different from the 521 00:30:58,280 --> 00:31:01,720 Speaker 1: world of nineteen twenty nine. In nine, at the beginning 522 00:31:01,720 --> 00:31:04,640 Speaker 1: of the Great Depression, there was a perceived need for 523 00:31:04,800 --> 00:31:08,920 Speaker 1: entertainment and a fear that the economic depression would destroy 524 00:31:09,040 --> 00:31:11,240 Speaker 1: the film industry, that they would go out of business 525 00:31:11,280 --> 00:31:14,000 Speaker 1: and you'd be left with nothing, and so the anti 526 00:31:14,000 --> 00:31:16,920 Speaker 1: competitive practices were seen as sort of the necessary evil 527 00:31:17,040 --> 00:31:21,040 Speaker 1: to keep the industry afloat. But in ninety six we 528 00:31:21,040 --> 00:31:23,880 Speaker 1: were out of the Great Depression, World War two was over, 529 00:31:24,080 --> 00:31:27,600 Speaker 1: soldiers had returned home, and more people were going to 530 00:31:27,680 --> 00:31:31,320 Speaker 1: the movies than ever before. The film industry was no 531 00:31:31,400 --> 00:31:35,240 Speaker 1: longer precariously positioned in an existential crisis. It was doing 532 00:31:35,360 --> 00:31:40,520 Speaker 1: really well. Further, only the five largest studios paramount included 533 00:31:40,880 --> 00:31:45,600 Speaker 1: had agreed to consent decrees that the court had previously issued, 534 00:31:45,960 --> 00:31:49,800 Speaker 1: and the consent decrees were essentially a temporary agreement to 535 00:31:49,920 --> 00:31:53,760 Speaker 1: stop doing stuff like blind booking and block booking. But 536 00:31:54,000 --> 00:31:58,480 Speaker 1: three smaller studios would not sign the consent decrease. They 537 00:31:58,600 --> 00:32:01,840 Speaker 1: argued that they actually needed those practices to be competitive 538 00:32:01,880 --> 00:32:06,080 Speaker 1: with the five larger studios because, unlike the major studios, 539 00:32:06,120 --> 00:32:09,360 Speaker 1: these three did not own their own theaters. So the 540 00:32:09,400 --> 00:32:13,800 Speaker 1: ninety six decision would eventually lay down the law for everybody. 541 00:32:14,240 --> 00:32:17,920 Speaker 1: It took some time, but eventually the movie studios all 542 00:32:18,080 --> 00:32:21,160 Speaker 1: capitulated to the pressure from the U. S. Department of Justice. 543 00:32:21,720 --> 00:32:23,960 Speaker 1: But the results of this might not have been what 544 00:32:24,040 --> 00:32:28,640 Speaker 1: the courts had originally intended. Over the following two decades, 545 00:32:29,120 --> 00:32:33,640 Speaker 1: more than five thousand movie theaters closed. The studios began 546 00:32:33,680 --> 00:32:37,560 Speaker 1: producing fewer movies. They had been producing several hundred per 547 00:32:37,640 --> 00:32:41,320 Speaker 1: year now it was a few hundred per year total, 548 00:32:41,720 --> 00:32:45,240 Speaker 1: and ticket prices were still on the rise. So there 549 00:32:45,240 --> 00:32:48,880 Speaker 1: were some definite downsides in the wake of this decision. 550 00:32:49,400 --> 00:32:52,240 Speaker 1: We can't blame it all on the court, of course, 551 00:32:52,280 --> 00:32:56,120 Speaker 1: because there were other elements at play, including the rise 552 00:32:56,120 --> 00:32:58,920 Speaker 1: of television, which was a big one, so it's pretty 553 00:32:58,920 --> 00:33:03,040 Speaker 1: complicated stuff. In addition, while the intent was to disrupt 554 00:33:03,080 --> 00:33:07,920 Speaker 1: anti competitive practices, it didn't really do that so much. 555 00:33:08,240 --> 00:33:10,520 Speaker 1: On the books, it was forbidden for a studio to 556 00:33:10,720 --> 00:33:14,120 Speaker 1: own its own chain of theaters. Soon new theater chains 557 00:33:14,120 --> 00:33:16,920 Speaker 1: would rise up instead. And while in theory the court 558 00:33:16,920 --> 00:33:20,000 Speaker 1: decision would have busted open the stranglehold that big studios 559 00:33:20,040 --> 00:33:23,880 Speaker 1: had on exhibition, that didn't play out so much. In reality. 560 00:33:24,320 --> 00:33:28,520 Speaker 1: The means to produce films became more attainable for independent filmmakers, 561 00:33:28,560 --> 00:33:32,080 Speaker 1: but the means to distribute movies for exhibition did not. 562 00:33:32,600 --> 00:33:34,920 Speaker 1: So in other words, you might be a humble little 563 00:33:34,920 --> 00:33:38,960 Speaker 1: film production studio and you might make real art on film, 564 00:33:39,400 --> 00:33:42,640 Speaker 1: but you would still probably need to find some distribution 565 00:33:42,680 --> 00:33:45,280 Speaker 1: company to strike up a deal with so that you 566 00:33:45,280 --> 00:33:48,800 Speaker 1: could get your finished movie into actual movie theaters. Otherwise, 567 00:33:49,280 --> 00:33:51,320 Speaker 1: you've got this amazing piece of art, but you don't 568 00:33:51,320 --> 00:33:53,320 Speaker 1: really have a way to show it off beyond maybe 569 00:33:53,360 --> 00:33:57,720 Speaker 1: some small screenings. As for movie theaters, they gravitated toward 570 00:33:57,800 --> 00:34:00,800 Speaker 1: carrying films that were likely to attract routes, which in 571 00:34:00,880 --> 00:34:04,800 Speaker 1: turn would gradually fuel the cycle of the blockbuster. You 572 00:34:04,800 --> 00:34:07,800 Speaker 1: can trace that history up to present day, when a 573 00:34:08,000 --> 00:34:11,760 Speaker 1: cinema complex with like twenty four screens will be showing 574 00:34:11,920 --> 00:34:15,319 Speaker 1: maybe a dozen films, with most screens dedicated to big 575 00:34:15,360 --> 00:34:19,239 Speaker 1: budget movies from a small handful of studios. And at 576 00:34:19,280 --> 00:34:20,799 Speaker 1: least that would be the case if it weren't for 577 00:34:20,800 --> 00:34:24,399 Speaker 1: the pandemic. Okay, but let's switch gears a little bit 578 00:34:24,440 --> 00:34:28,640 Speaker 1: and talk about streaming. Online streaming, much like TV and 579 00:34:28,680 --> 00:34:32,480 Speaker 1: the home video market, which obviously came before streaming, it 580 00:34:32,560 --> 00:34:35,640 Speaker 1: became a big disruptor in recent years. Early on, the 581 00:34:35,680 --> 00:34:39,000 Speaker 1: concern was that a single entity like Netflix would dominate 582 00:34:39,040 --> 00:34:41,840 Speaker 1: the space, and if Netflix were to become the default 583 00:34:41,840 --> 00:34:45,840 Speaker 1: option for most consumers, they would give Netflix an enormous 584 00:34:45,840 --> 00:34:49,040 Speaker 1: amount of leverage When working out deals for carrying content 585 00:34:49,200 --> 00:34:52,719 Speaker 1: on their platform. As such, a lot of different entertainment 586 00:34:52,760 --> 00:34:56,480 Speaker 1: and cable companies began to launch competing services. So that's 587 00:34:56,520 --> 00:34:59,759 Speaker 1: why we've got stuff like Hulu and Amazon Video and 588 00:35:00,160 --> 00:35:03,360 Speaker 1: HBO Now and HBO Max and Disney Plus and Peacock 589 00:35:03,480 --> 00:35:06,880 Speaker 1: and such. And here we see an interesting evolution of 590 00:35:06,920 --> 00:35:11,480 Speaker 1: that old problem of vertical integration. This is exacerbated due 591 00:35:11,560 --> 00:35:14,880 Speaker 1: to the various acquisitions and mergers that film studios have 592 00:35:14,960 --> 00:35:17,400 Speaker 1: been part of over the last few decades. So let's 593 00:35:17,560 --> 00:35:21,000 Speaker 1: go over a few of them in brief. There are 594 00:35:21,040 --> 00:35:24,520 Speaker 1: a few movie studios that really exist only as a brand, 595 00:35:25,160 --> 00:35:28,080 Speaker 1: which means that you know, you might see a movie 596 00:35:28,120 --> 00:35:32,200 Speaker 1: branded as a particular studios production, but ultimately it belongs 597 00:35:32,239 --> 00:35:36,080 Speaker 1: to a much larger company, like a larger production studio, 598 00:35:36,360 --> 00:35:38,799 Speaker 1: and it's just sort of a way to brand that 599 00:35:38,840 --> 00:35:42,240 Speaker 1: film a specific way. So we're going to ignore those. 600 00:35:42,280 --> 00:35:44,360 Speaker 1: I mean, there's no point in talking about them because 601 00:35:44,680 --> 00:35:46,799 Speaker 1: they don't really exist on their own. They're part of 602 00:35:46,800 --> 00:35:50,520 Speaker 1: a bigger company, alright. So Universal Pictures, one of the 603 00:35:50,560 --> 00:35:54,720 Speaker 1: oldest studios that's still around, is now part of NBC 604 00:35:55,000 --> 00:35:59,120 Speaker 1: Universal and Comcast. So within that family, you've got a 605 00:35:59,160 --> 00:36:03,560 Speaker 1: telecommunication company that's Comcast. You've got a TV network in NBC, 606 00:36:04,080 --> 00:36:07,319 Speaker 1: and a film and more TV studios with Universal, and 607 00:36:07,360 --> 00:36:11,440 Speaker 1: this company has the streaming service Peacock. Then we've got 608 00:36:11,520 --> 00:36:14,600 Speaker 1: Warner Brothers Pictures, which is part of A T and T. 609 00:36:14,960 --> 00:36:19,120 Speaker 1: So we've got another telecommunications company. And we've got Warner Media, 610 00:36:19,320 --> 00:36:22,000 Speaker 1: which was formerly known as Time Warner, which is a 611 00:36:22,000 --> 00:36:25,280 Speaker 1: production company that includes film and TV studios. It also 612 00:36:25,360 --> 00:36:28,720 Speaker 1: owns cable channels like HBO and a ton of others 613 00:36:28,760 --> 00:36:32,239 Speaker 1: like Cartoon Network and CNN and TBS and more. So 614 00:36:32,280 --> 00:36:36,760 Speaker 1: this company has HBO Max as a streaming service. Then 615 00:36:36,800 --> 00:36:39,439 Speaker 1: we've got Columbia Pictures, which is part of a group 616 00:36:39,440 --> 00:36:43,680 Speaker 1: of studios owned by Sony, the Japanese mega corporation. Sony 617 00:36:43,719 --> 00:36:46,319 Speaker 1: A one time owned a streaming service called Crackle, but 618 00:36:46,400 --> 00:36:49,520 Speaker 1: has since divested itself of that. So it's kind of 619 00:36:49,520 --> 00:36:52,239 Speaker 1: the odd man out when it comes to production, distribution, 620 00:36:52,239 --> 00:36:57,520 Speaker 1: and exhibition with this particular use case. There's Paramount, of course, 621 00:36:57,560 --> 00:37:01,160 Speaker 1: which is part of Viacom CBS. That's an other super 622 00:37:01,200 --> 00:37:04,200 Speaker 1: complicated story that I should dive into at some point, 623 00:37:04,640 --> 00:37:07,760 Speaker 1: but this company includes Viacom, a cable company that owns 624 00:37:07,800 --> 00:37:12,920 Speaker 1: networks like MTV, Comedy Central, Showtime, and Nickelodeon, among others. 625 00:37:12,920 --> 00:37:17,000 Speaker 1: CBS another TV network, and Paramount Pictures, a film and 626 00:37:17,040 --> 00:37:20,360 Speaker 1: television production company, and they have their own streaming service 627 00:37:20,400 --> 00:37:25,400 Speaker 1: in the form of Pluto TV and CBS All All Access. Uh. Finally, 628 00:37:25,719 --> 00:37:30,800 Speaker 1: we've got the Mouse House, truly gargantuan media and entertainment 629 00:37:30,840 --> 00:37:35,160 Speaker 1: company also known as Disney. So we've got Walt Disney Pictures. 630 00:37:35,200 --> 00:37:38,960 Speaker 1: We've got the former twentieth Century Fox, which had film 631 00:37:38,960 --> 00:37:43,800 Speaker 1: and TV studios. You've got properties like ABC, another television network, 632 00:37:44,200 --> 00:37:47,759 Speaker 1: and you've got Disney Plus as a streaming service as 633 00:37:47,760 --> 00:37:50,799 Speaker 1: well as some other streaming services like ESPN Plus and 634 00:37:50,960 --> 00:37:54,880 Speaker 1: Disney also owns Hulu. Now. So, in the era of 635 00:37:54,920 --> 00:37:58,759 Speaker 1: the pandemic, when movie theaters are closed in many locations 636 00:37:58,760 --> 00:38:01,799 Speaker 1: in some theater chains have shut down at least for 637 00:38:01,840 --> 00:38:06,399 Speaker 1: the time being, the vertical integration approach creates a new opportunity. 638 00:38:06,800 --> 00:38:11,160 Speaker 1: Studios can, if they so choose, opt to release properties 639 00:38:11,200 --> 00:38:15,480 Speaker 1: on streaming services that they own, rather than sit on 640 00:38:15,600 --> 00:38:19,560 Speaker 1: films until it's safe for theaters to open it full capacity. 641 00:38:19,640 --> 00:38:24,680 Speaker 1: So movie studios depend heavily on box office returns typically, 642 00:38:24,719 --> 00:38:27,680 Speaker 1: the first weekend of box office returns tends to be 643 00:38:27,760 --> 00:38:30,920 Speaker 1: the most important. Not in every case, but in the 644 00:38:31,000 --> 00:38:36,000 Speaker 1: vast majority that's true. So there's a strong incentive to 645 00:38:36,160 --> 00:38:39,840 Speaker 1: hold off on releasing films before our theaters can open 646 00:38:40,320 --> 00:38:42,920 Speaker 1: in full again. But at the same time, there's a 647 00:38:42,920 --> 00:38:46,480 Speaker 1: lot of uncertainty about when that will ever happen, and 648 00:38:46,520 --> 00:38:49,920 Speaker 1: there's an even bigger question if audiences will flock to 649 00:38:50,000 --> 00:38:54,160 Speaker 1: theaters once they are open for for business as usual, 650 00:38:54,840 --> 00:38:57,319 Speaker 1: and if this takes too long, we might see some 651 00:38:57,400 --> 00:39:00,200 Speaker 1: movie theaters just go out of business. Both on the 652 00:39:00,320 --> 00:39:04,560 Speaker 1: smaller independent scene and even with the bigger theater chains, 653 00:39:04,600 --> 00:39:08,080 Speaker 1: there's talk of insolvency among some of those operating a 654 00:39:08,120 --> 00:39:10,880 Speaker 1: theater is already tough. Most theaters make the bulk of 655 00:39:10,920 --> 00:39:14,839 Speaker 1: their revenue not through ticket sales but through concessions, which 656 00:39:14,920 --> 00:39:17,400 Speaker 1: is why it costs so dang much to get snacks, 657 00:39:17,440 --> 00:39:21,120 Speaker 1: because that's where the profit margin really is for theaters. 658 00:39:21,160 --> 00:39:24,040 Speaker 1: On the one hand, studios run the risk of alienating 659 00:39:24,160 --> 00:39:27,160 Speaker 1: theater owners, and I think mostly we're talking about the 660 00:39:27,200 --> 00:39:30,400 Speaker 1: big chains like AMC and Regal here in the United States, 661 00:39:30,480 --> 00:39:33,640 Speaker 1: so there's been some reluctance among studios to make a 662 00:39:33,640 --> 00:39:38,600 Speaker 1: big move toward releasing films online, even on their own services. 663 00:39:38,640 --> 00:39:41,600 Speaker 1: But on the other hand, studios need to pull in revenue, 664 00:39:41,880 --> 00:39:45,000 Speaker 1: and so many are part of these bigger companies, these 665 00:39:45,040 --> 00:39:49,080 Speaker 1: bigger telecommunications and entertainment companies, and they look to their 666 00:39:49,120 --> 00:39:52,080 Speaker 1: streaming service as a way to bring in cash regularly 667 00:39:52,200 --> 00:39:56,440 Speaker 1: every month by building a subscriber base, and that they 668 00:39:56,480 --> 00:39:58,960 Speaker 1: have to make a uh an incentive for people to 669 00:39:59,160 --> 00:40:02,920 Speaker 1: subscribe to those services. So you can use movies to 670 00:40:03,040 --> 00:40:06,480 Speaker 1: convince people to subscribe to say HBO Max for example, 671 00:40:06,520 --> 00:40:08,920 Speaker 1: and maybe they otherwise wouldn't, but they'll do it in 672 00:40:09,080 --> 00:40:11,560 Speaker 1: order to be able to see you Wonder Woman ur 673 00:40:11,640 --> 00:40:15,360 Speaker 1: or something. So some studios are making compromises. For example, 674 00:40:15,520 --> 00:40:19,440 Speaker 1: Paramount has negotiated a deal with theaters that narrows the 675 00:40:19,480 --> 00:40:23,240 Speaker 1: exclusive window that theaters have for carrying a first release film. 676 00:40:23,480 --> 00:40:28,040 Speaker 1: In normal circumstances, theaters have dibbs on a new release 677 00:40:28,120 --> 00:40:30,880 Speaker 1: for at least a few months before a studio pivots 678 00:40:30,920 --> 00:40:35,200 Speaker 1: towards the home theater market and streaming market, but Paramounts 679 00:40:35,280 --> 00:40:39,480 Speaker 1: deal narrows that down to seventeen days, so a little 680 00:40:39,520 --> 00:40:43,239 Speaker 1: more than two weeks after a movie hits theaters. Paramount 681 00:40:43,280 --> 00:40:48,040 Speaker 1: can then make that film available to various streaming services, 682 00:40:48,360 --> 00:40:52,720 Speaker 1: most likely its own. Warner Brothers went a step further. 683 00:40:53,239 --> 00:40:57,879 Speaker 1: Warner Brothers announced that its entire slate of films for one, 684 00:40:58,000 --> 00:41:02,040 Speaker 1: which includes seventeen films into total, will be available both 685 00:41:02,080 --> 00:41:06,480 Speaker 1: in theaters and streaming on HBO Max on day one 686 00:41:06,760 --> 00:41:10,640 Speaker 1: of that film's release. However, in sort of a reverse 687 00:41:10,719 --> 00:41:14,320 Speaker 1: move from what Paramount is doing, these films will only 688 00:41:14,360 --> 00:41:18,040 Speaker 1: be available in HBO Max for thirty one days after 689 00:41:18,080 --> 00:41:20,720 Speaker 1: the film's released or thirty one days including the film's release, 690 00:41:20,760 --> 00:41:23,359 Speaker 1: so it would disappear from the service thirty one days 691 00:41:23,360 --> 00:41:26,080 Speaker 1: after the movie comes out in theaters. And I find 692 00:41:26,120 --> 00:41:30,040 Speaker 1: it fascinating that movie studios, now part of even bigger 693 00:41:30,160 --> 00:41:34,480 Speaker 1: media companies, have turned the vertical integration dial up to eleven. 694 00:41:34,920 --> 00:41:37,160 Speaker 1: My original plan for this episode was to talk about 695 00:41:37,200 --> 00:41:39,600 Speaker 1: how this new situation is kind of a workaround of 696 00:41:39,680 --> 00:41:44,000 Speaker 1: that old restriction that says studios can't own theaters. But hey, 697 00:41:44,080 --> 00:41:47,760 Speaker 1: jokes on me, because in August, the Department of Justice 698 00:41:47,800 --> 00:41:52,440 Speaker 1: decided to dissolve those restrictions on studios, citing that because 699 00:41:52,480 --> 00:41:54,520 Speaker 1: it's a different world than what we had back in 700 00:41:54,560 --> 00:41:59,160 Speaker 1: the nineteen forties, those restrictions don't really apply anymore now. 701 00:41:59,200 --> 00:42:00,840 Speaker 1: I don't think in the end that this is that 702 00:42:00,960 --> 00:42:03,840 Speaker 1: big of a change, but that's because the Supreme Court 703 00:42:03,960 --> 00:42:08,200 Speaker 1: ruling didn't necessarily have the effect that I think the 704 00:42:08,320 --> 00:42:12,239 Speaker 1: justices intended in the first place. But really, what I 705 00:42:12,239 --> 00:42:14,160 Speaker 1: guess I need to say is that it's really all 706 00:42:14,200 --> 00:42:18,000 Speaker 1: a moot point. Vertical integration is here big time, and 707 00:42:18,040 --> 00:42:20,600 Speaker 1: what happens next will largely depend on how things play 708 00:42:20,600 --> 00:42:24,840 Speaker 1: out with the pandemic and vaccines. If the theater experience 709 00:42:24,960 --> 00:42:28,200 Speaker 1: is fading into the past because of you know, the 710 00:42:28,280 --> 00:42:31,680 Speaker 1: economics of running a theater house and the fears of 711 00:42:32,200 --> 00:42:35,720 Speaker 1: things like pandemics and other health issues, we should expect 712 00:42:35,719 --> 00:42:38,280 Speaker 1: to see a change in the way movies are produced 713 00:42:38,320 --> 00:42:42,520 Speaker 1: as well. I suspect movies aren't going anywhere. There will 714 00:42:42,560 --> 00:42:46,400 Speaker 1: always be a desire to create among directors and actors. 715 00:42:46,440 --> 00:42:48,880 Speaker 1: That's going to stick around no matter what the circumstances. 716 00:42:49,400 --> 00:42:52,840 Speaker 1: But if theaters can't recover, there will be no hope 717 00:42:52,920 --> 00:42:56,279 Speaker 1: of having that big box office weekend to recoup the 718 00:42:56,360 --> 00:43:00,000 Speaker 1: cost of production. And without that payout, it would make 719 00:43:00,280 --> 00:43:04,120 Speaker 1: little sense to see big budget films move forward because 720 00:43:04,120 --> 00:43:06,640 Speaker 1: the chances of making your money back would go down, 721 00:43:07,200 --> 00:43:10,800 Speaker 1: particularly as consumers have to pick and choose which streaming 722 00:43:10,840 --> 00:43:13,960 Speaker 1: services they subscribe to. That can also be a pain point. 723 00:43:14,320 --> 00:43:17,680 Speaker 1: It's eerily similar to the prospect that the theater closest 724 00:43:17,719 --> 00:43:21,080 Speaker 1: to you is only running movies from a single studio. 725 00:43:21,920 --> 00:43:24,920 Speaker 1: You have less choice unless you're willing to pay the 726 00:43:24,960 --> 00:43:28,800 Speaker 1: subscription fee to numerous services so that you have access 727 00:43:28,880 --> 00:43:33,600 Speaker 1: to everything. It's not great for consumers, and it's not 728 00:43:33,760 --> 00:43:36,279 Speaker 1: super great for creators because they're going to see their 729 00:43:36,280 --> 00:43:40,120 Speaker 1: budgets shrink. It's not even great for the studios. If 730 00:43:40,120 --> 00:43:44,320 Speaker 1: you hit your saturation point for subscribers, meaning no matter 731 00:43:44,360 --> 00:43:46,920 Speaker 1: what you do, you are not likely to increase your 732 00:43:46,960 --> 00:43:50,359 Speaker 1: subscriber number in any significant way. You have hit that 733 00:43:50,440 --> 00:43:54,279 Speaker 1: saturation point for the market, then at what point do 734 00:43:54,280 --> 00:43:57,480 Speaker 1: you have incentive to invest in interesting projects. You can't 735 00:43:57,560 --> 00:44:02,120 Speaker 1: get any bigger, so why would you spend more than 736 00:44:02,160 --> 00:44:04,960 Speaker 1: you have to? You just you just need enough stuff 737 00:44:05,040 --> 00:44:08,640 Speaker 1: to keep people subscribed. That's all you need. You don't 738 00:44:08,760 --> 00:44:11,560 Speaker 1: need to attract more people because more people aren't coming. 739 00:44:11,800 --> 00:44:14,040 Speaker 1: We see this in the cable industry too. By the way, 740 00:44:14,360 --> 00:44:17,480 Speaker 1: cable companies will hit a saturation point within a market, 741 00:44:18,080 --> 00:44:22,680 Speaker 1: they literally can't get into more homes in that market. Well, 742 00:44:22,760 --> 00:44:25,240 Speaker 1: the only thing you can do is to maybe launch 743 00:44:25,239 --> 00:44:29,240 Speaker 1: a new channel or try to go into a country 744 00:44:29,320 --> 00:44:32,000 Speaker 1: where you don't have a presence already. I saw that 745 00:44:32,080 --> 00:44:36,880 Speaker 1: firsthand when I was working with Discovery Communications. And there's 746 00:44:36,880 --> 00:44:40,160 Speaker 1: a lot that I think is wrong with the entertainment industry. 747 00:44:40,520 --> 00:44:42,719 Speaker 1: I haven't really scratched the surface of all of that 748 00:44:42,760 --> 00:44:45,759 Speaker 1: because it goes deep, but I do hope that we 749 00:44:45,800 --> 00:44:49,000 Speaker 1: can see a recovery with movie theaters. One thing I 750 00:44:49,040 --> 00:44:52,280 Speaker 1: do take comfort in is that we have always loved 751 00:44:52,440 --> 00:44:55,280 Speaker 1: stories since before the time we could write them down, 752 00:44:55,880 --> 00:44:59,680 Speaker 1: So that loves stories that's not going anywhere. We just 753 00:44:59,840 --> 00:45:02,080 Speaker 1: my see some big changes in the ways that we 754 00:45:02,160 --> 00:45:05,759 Speaker 1: tell them. But I do hope that movie theaters make 755 00:45:05,840 --> 00:45:09,480 Speaker 1: a recovery and that we can continue to see innovative 756 00:45:09,520 --> 00:45:12,960 Speaker 1: and big budget films. I mean, I have a lot 757 00:45:13,000 --> 00:45:15,960 Speaker 1: of feelings about various big budget movies. You can hear 758 00:45:16,000 --> 00:45:19,040 Speaker 1: more about my feelings on the podcast The Large Nerdron 759 00:45:19,120 --> 00:45:24,040 Speaker 1: Collider that will be available later this week. It launches 760 00:45:24,080 --> 00:45:27,799 Speaker 1: on Wednesday, so keep an ear out for that, but 761 00:45:28,440 --> 00:45:31,200 Speaker 1: I'll save it for that In the meantime, if you 762 00:45:31,320 --> 00:45:34,640 Speaker 1: have suggestions for future topics that I can cover here 763 00:45:34,719 --> 00:45:38,040 Speaker 1: on tech Stuff, reach out and let me know what 764 00:45:38,200 --> 00:45:42,040 Speaker 1: you are thinking. Because I cannot do it by myself. 765 00:45:42,480 --> 00:45:45,319 Speaker 1: I am not psychic, So the best way to do 766 00:45:45,360 --> 00:45:47,680 Speaker 1: that is to reach out on Twitter. The handle is 767 00:45:47,840 --> 00:45:50,920 Speaker 1: text stuff H s W and I'll talk to you 768 00:45:50,960 --> 00:45:59,720 Speaker 1: again really soon. Text Stuff is an I heart Radio 769 00:45:59,760 --> 00:46:03,160 Speaker 1: pre aduction. For more podcasts from I Heart Radio, visit 770 00:46:03,200 --> 00:46:06,279 Speaker 1: the i heart Radio app, Apple Podcasts, or wherever you 771 00:46:06,320 --> 00:46:12,239 Speaker 1: listen to your favorite shows. H