The Similarity of the NWA DOJ Anti-Trust Case and the Case Against Paramount Pictures
The Paramount case is the master key to mid-century entertainment antitrust. United States v. Paramount Pictures, Inc., 334 U.S. 131 (1948), taught the Justice Department how to describe a vertically integrated amusement cartel, how to separate production from exhibition, and how to write a consent decree that lasts longer than the market it was meant to fix. When the same Division built United States v. National Wrestling Alliance eight years later, it was applying a Paramount education to a different product. The results were related and not identical. Paramount broke a studio system. The NWA decree only told a booking club to stop writing its rules down.
What the Court actually decided
The suit began in 1938 against the eight companies that dominated American film: the “Big Five” producer-distributor-exhibitors (Paramount, Loew’s/MGM, Warner Bros., 20th Century-Fox, RKO) and the “Little Three” producer-distributors without large theater chains (Columbia, Universal, United Artists). After a wartime pause and a 1940 consent decree that left vertical integration standing, the case returned. The Supreme Court decided it on May 3, 1948, 7–1, Justice William O. Douglas writing.
Douglas did not invent a new offense. He applied Sherman Act Sections 1 and 2 to a set of trade practices that converted copyright monopoly in each film into control of the theater market:
Block booking. Licensing one feature only if the exhibitor also took other features, often unseen and unmade. The Court treated this as tying one copyright to another. A theater that wanted the A-picture had to buy the B-pictures.
Clearances. Exclusive runs for designated geographic areas and for designated periods before a neighboring house could play the same film. Reasonable protection of a first-run investment could survive. Overbroad clearances that allocated whole cities were a market division.
Price fixing. Minimum admission prices imposed by distributors on exhibitors — resale price maintenance in the ticket window.
Circuit dealing. Licensing a film to an entire commonly owned circuit rather than theater by theater, so a chain could extract better terms than an independent house next door.
Pooling and discrimination. Joint operation of theaters and reciprocal favors among the majors that froze independents out of first-run downtown houses.
