Friday, December 8

How Beyoncé and Taylor Swift Struck a New Kind of Movie Deal

DealBook spoke to Makan Delrahim, the former D.O.J. antitrust division chief who proposed that change to the law in 2018, about how it facilitated the pop stars’ movie deals.

Swift’s agreement includes some terms that would have been unlikely a few years ago. In 1938, The D.O.J. sued what were then the Big Five studios — MGM, Paramount, RKO, 20th Century Fox and Warner Brothers — for monopolizing the movie industry and forcing exhibitors to take unfavorable deals. In 1948, the studios entered into the “Paramount consent decrees,” which limited their ability to own or control theaters. Over time, these decrees became de facto standards for the industry, Delrahim said, and Swift and Beyoncé may not have been able to make the deals they did if the decrees were still in effect.

Delrahim said he saw the decrees — which were created before streaming, cable and television had established new types of competition for theaters — as a “misguided form of government intervention in the free markets” that “stunts innovation and pro-consumer business practices.” After a period of public comment, he asked a federal judge to dissolve the consent decrees, and the court agreed. The expiration of certain parts of the decrees has allowed for new innovations in movie deal making, Delrahim said.

Swift was able to make one deal with AMC for all of its theaters, and it could make deals with other movie theater chains that covered all of their theaters. Under the Paramount consent decrees, standard practice was to negotiate with theaters individually instead of licensing to a block of theaters at once. But because the law changed, Swift did not need to negotiate with individual theaters. She only had to negotiate with AMC. The new way is “much more efficient and allows for innovative practices such as the Taylor Swift deal with AMC,” Delrahim said.

Another change allowed for minimum ticket prices. Previously, a studio couldn’t require a theater to keep prices above a particular floor. “Had the decrees been in effect, it’s likely that the specific price that Ms. Swift required for her upcoming film, which reflects her birthday year, wouldn’t have been allowed,” he said. “Given the early demand, it’s probably underpriced, but it’s great for the consumer and for Ms. Swift’s fans.” Beyoncé’s tickets will be priced at $22, also a minimum price that would not have been tolerated in the time of the decrees.