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Studios had to divest themselves of theatres

Photo caption: This photograph showing one of the earliest RCA television sets shows how the technology has changed dramatically over the years.

Source: National Archives

The courts ruled that the film industry’s methods of distributing movies represented an illegal restraint of trade.  The courts opposed block booking, claiming it was unfair to individual exhibitors because it required them to book many pictures they didn’t want just to get the few they did.

Movie chains owned by the major studios made it even harder for independent theatre owners to compete.  In 1948, the Supreme Court ruled (in U.S. vs. Paramount Pictures, Inc.) that the studios had to divest themselves of their theatres.

That eliminated the guaranteed outlet for the studios’ product, no matter how good or bad it was.  Now, after decades of turning out pictures by the thousands and raking in profits, the studios would have to compete on the basis of quality entertainment.