Movie Studios Can Buy Theaters Now, But It Turns Out They Don't Want To

For most of the lifetime of the cinema medium, movie studios were not allowed to own movie theaters. A New York judge struck that ruling down in August, but, thus far, studios don’t seem to be taking the bait. The CEOs of Warner Bros. and Universal Studios said this past week that they have “no plans” to do so, Deadline reports.

“We have no plans to do that currently,” said Universal chairman Donna Langley when asked if her company was interested in buying up movie theaters in the struggling industry. “We have no plans either,” added Warner Bros. chair and CEO Ann Sarnoff. The two were speaking at a Milken Institute Global Conference virtual panel. Sarnoff laughed as she answered, Deadline reports.

The onset of the COVID-19 pandemic brought the theater industry to a screeching halt earlier this year, and companies like AMC have only been able to take the smallest of steps to start moving again since. Cineworld’s Regal Cinemas are shut down completely for the time being, and AMC says it could run out of cash to keep going by early 2021.

Further, this comes hot on the heels of a major legal change. Shortly after movie theaters became a viable business in the early 1910s, movie studios started snapping up theaters. In 1948, the United States Supreme Court made the landmark decision, known as the Paramount Decree, that movie studios could not own movie theaters, as the vertical integration violated United States antitrust law. This decision stood until August 7, 2020, when the courts granted the Department of Justice’s motion to lift the decree over a period of two years. In other words, studios like Universal and Warner Bros. are allowed to own movie theaters in the United States for the first time in almost 70 years. Instead, studios say they’re rooting for exhibitors to survive on their own.

“I’m kind of an armchair sociologist and I believe people want to have communal experiences and especially with certain genres,” Sarnoff said. “We’re big fans of the exhibitors; they’ve been good partners of ours for many decades. We’re rooting for them. I know it’s tough sledding right now. I’m hoping they come out on the other side, probably even stronger.”

Even as Sarnoff says that, citing genres like horror and superhero films as theater-perfect experiences, studios are shifting toward streaming. Universal and AMC got into it earlier this year when the former released its movie Trolls: World Tour onto VOD in the early months of the pandemic. Warner Bros. announced this summer that Zack Snyder’s cut of Justice League will premiere as an HBO Max miniseries. More recently, Disney has begun to experiment with sending movies directly to its Disney+ streaming service, starting with Mulan and Pixar’s Soul, and now Disney is starting a major re-org with Disney+ in the spotlight.

The longer the closures go on, it makes sense to wonder whether or not studios still need the theater system as a means of distributing their products. Sarnoff’s seemingly dismissive response to the question suggests otherwise.

Image credit: Getty Images/AaronP/Bauer-Griffin

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