The DOJ's entertainment industry blitz

This July, no one in Hollywood was surprised to see his office lobby littered with a prescient edition of The Hollywood Reporter, whose cover story read, "Welcome to Hollywood's Age of Anxiety."  In it, THR executive editor Stephen Galloway chronicled what is evident to anyone with an iPhone: that digital distribution, whether through streaming services or social media, is permanently altering the way Americans consume media and is thwarting longstanding business models that honchos in the film, TV, and music industries depend on to monetize artists' work.

Assistant Attorney General Makan Delrahim must have had his head inside the Hollywood zeitgeist, because shortly afterward, he tasked the Department of Justice (DOJ)'s anti-trust bureau with reviewing over 1,000 longstanding consent decrees, including those that police the entertainment industry against anti-competitive business practices.  The history here is important.

Since 1948, court orders known as the Paramount Decrees have prevented movie studios from doing two things: owning their own theaters and "block booking" what plays in someone else's.  "Block booking" is an industry term for what happens when a big studio, like Disney or Fox, tells your local theater that it can play a tent-pole hit only if it also agrees to take on money-losing schlock with it.  It's the equivalent of saying, "You can have Avengers...but you also have to devote screens to A Wrinkle in TimeSherlock Gnomes, and Geostorm." 

The DOJ is also reviewing separate but similar consent decrees governing music licensing for "public performances," which is the legal term for any time a radio station, bar, stadium, etc. plays copyrighted music.  If a venue plays a song to beef up its atmosphere, it's on the hook to pay for the song's use. 

The issue here involves two 1941 consent decrees with the American Society of Composers, Authors and Publishers (ASCAP) and Broadcast Music, Inc. (BMI), which constitute the duopoly that controls the rights to 90 percent of all the music recorded in America.

Basically, the DOJ requires ASCAP and BMI to treat their catalogs like a library: once you've paid for a "blanket license," you can access everything inside, regardless of whether it's a chart-topper or a little known act.  This arrangement lets musicians sell their content collectively without having to negotiate with every venue and radio station in the country.  It also protects buyers on the other end from being gouged by the music industry's version of block booking, which is what happens when I.P. owners force buyers to purchase licenses to money-losers like the Jingle Cats on top of the rights to songs they actually want – for example, Drake's latest hit.

All such consent decrees exist to prevent bullying in the savagely competitive media business, and both of the ones at issue here are drawing scrutiny from the DOJ.  However, despite their similarities, these issues require different forms of regulatory finesse.

In the case of movie studios, regulators should investigate whether it is still wise to keep them from owning their own distribution, given that these companies are now competing directly with vertically integrated TV networks streaming on every phone and tablet.  These days, it's a safe bet that any TV show you watch was written, financed, produced, and distributed by the same company.  Why shouldn't moviemakers have this same option?

However, in the music licensing business, the problem is the opposite: there is almost no meaningful competition.  ASCAP and BMI own 90-percent of public performance song licenses, and there is no obvious way for venues and artists to contract without them as intermediaries.  If the consent decrees that govern their relationship with artists and venues were to disappear overnight, as DOJ is considering, why wouldn't ASCAP and BMI use their privileged position to exploit them once again? 

For the time being, 2019's likely House and Senate Judiciary Committee chairmen, Jerry Nadler (D-N.Y.-10) and Lindsey Graham (R-S.C.), need to exercise the oversight powers given to them under the Music Modernization Act and monitor any major moves on the ASCAP and BMI consent decrees, while also paying close attention to the Paramount agreements.  The path to reform should go through Congress, where legislators can weigh the film, television, music, and technology businesses' needs together with the big picture.

On some level, the DOJ already knows this.  In his speech to the National Music Publishers Association, Delrahim said he has "set out to review" the ASCAP-BMI consent decrees "to make sure they're not doing more harm than good."  The operative phrase here is do no harm, and harm is exactly what the Trump administration would do if it abruptly ended these 77-year-old agreements.  Doing this would be, as government officials are fond of saying, a solution in search of a problem.

Alex Keeney is a television writer, blogger, and political consultant residing in Los Angeles.  He is also a former House of Representatives legislative aide and founder of, a blog that tracks elections and legislation through the lens of Las Vegas bookmakers' odds on their outcomes.

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