Was the Antitrust Action that Broke Up the Movie Studios Good for the Movies? Evidence from the Stock Market

The Impact of Conviction for Anti‐Competitive Practices on Firm Valuation: A Contingency Approach

“…Conversely, easing off on antitrust actions had a positive impact on this index. Devany and McMillan (2004) investigated a series of actions by the DOJ against the major American film studios from 1938 to 1949. The principal decision of the DOJ was to force the vertically integrated studios to separate from their cinemas.…”

“…Surprisingly, the previous research has shown conflicting results. A number of studies have shown that this type of conviction has a negative impact on market value (Ellert, 1976;Garbade et al, 1982;Strachan et al, 1983;Gilligan, 1986;Skantz et al, 1990;Bosch and Eckard, 1991;Mullin et al, 1995;Bittlingmayer and Hazlett, 2000;Devany and McMillan, 2004), whereas other studies have found no significant impact (Burns, 1977;Binder, 1988;Hersch, 1994;Thompson and Kaserman, 2001;Feinberg and Round, 2005).…”

Transforming the global film industries

“…Jin 413 There are several major historical factors that have influenced the exhibition industry in the US, which have consequently influenced other countries: the antitrust action to separate the production of films from their exhibition in the late 1940s; the advent of television in the 1970s; and the rise of VHS and DVD systems in the 1990s and the 21st century. To begin with, during the studio era, mainly until the 1940s, some studios, like MGM, RKP, Warner Brothers, and Paramount Pictures, vertically controlled theater outlets for first-run films, and they owned many of these theaters (De Vany and McMillan, 2004). Their grip was so strong that the US government separated the functions in a series of antitrust orders in the late 1940s.…”

Government Intervention to Prevent Bankruptcy: The Effect of Blind‐bidding Laws on Movie Theaters

“…Harvard Law Review (1979), DeVany and Eckert (1991), and DeVany and Walls (1997), among several others, argue that the Paramount decision was ill‐advised. For example, according to DeVany and McMillan (2004), the Supreme Court has stood in the way of ownership, franchising, or other forms of long‐term contracting between exhibitors and distributors. DeVany and Eckert and Sedgwick add that the studio system and block booking were adaptations to added uncertainty associated with the decision.…”