Wednesday, March 6, 2013

Paramount - It can make and broadcast TV but not own a movie theatre

Paramount Studios has announced that it will once again produce product for television. An initial project will be based on the Beverly Hills Cop series of films that starred Eddie Murphy. This is the first time in eight years that Paramount has been involved in developing product for TV.

Paramount was once a major player producing TV series. In the 60s, it often partnered with Desilu (the production company started by Lucille Ball and Desi Arnaz) which was headquartered on the Paramount lot. In the 70s, 80s and 90s it produced huge hits on television: Star Trek (and its subsequent spinoffs), Taxi, The Odd Couple, Happy Days, Mork and Mindy (which gave Robin Williams his start), Cheers, MacGyver (on which I worked and which was produced by Henry Winkler) and Frasier.

For a time Paramount not only produced for television but broadcast it as well as a part of CBS (and for a time as the short-lived UPN).

This is interesting, because…

From the beginning, the broadcast networks, while purchasing some product from studios, particularly Universal, also produced their own shows. CBS still has its own studio with 18 sound stages in Studio City in the San Fernando Valley. That means that CBS and the other networks could not only own the product but the vehicle through which the product was distributed.

The networks could do this but studios like Paramount could not with their feature films.

As I have written about the great movie palaces of the first half of the 20th Century, it is noted that many of the movie theatres were part of chains owned by the studios: Fox, Warner Brothers, Paramount, etc.

That came to an end in 1948 with a court decision – the Paramount Decree, ironically – that required the studios to divest themselves of their movie theatre chains.

The U.S. Justice Department had sued the studios under terms of the Sherman Anti-Trust Act, claiming restraint of trade, etc and won with the decision of 1948.

Studios are still prohibited from owning movie theatres, but not from ownership or co-ownership of television distribution outlets, which arguably is much more lucrative.

The most conspicuous example is that of Comcast/NBC Universal. Universal Studios had produced product for NBC beginning in 1950 through its television production arm Revue. Overtime Universal went through a series of ownership changes. It had been built by the Laemmle brothers, was eventually acquired by MCA, a Chicago entertainment management and theatrical booking agency. In 2000, Universal was acquired by the French media company Vivendi. In 2003 Vivendi sold 80% of Universal to NBC’s parent company General Electric.

In 2009 the cable giant, Comcast bought out 51% of Universal from Vivendi and GE. Comcast is now buying the other 49%.

So now, Comcast, makes movies, operates theme parks, makes television programs and distributes them through its cable networks.

But they can’t own movie theatres – yet.

Media consolidation, indeed

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