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Justice Department Warns Academy About Changing Oscar Rules To Exclude Streaming (techcrunch.com)
The Justice Department has warned the Academy of Motion Picture Arts and Sciences that its potential rule changes limiting the eligibility of Netflix and other streaming services for the Oscars could raise antitrust concerns and violate competition law. From the report: According to a letter obtained by Variety, the chief of the DOJ's Antitrust Division, Makan Delrahim, wrote to AMPAS CEO Dawn Hudson on March 21 to express concerns that new rules would be written "in a way that tends to suppress competition." "In the event that the Academy -- an association that includes multiple competitors in its membership -- establishes certain eligibility requirements for the Oscars that eliminate competition without procompetitive justification, such conduct may raise antitrust concerns," Delrahim wrote. The letter came in response to reports that Steven Spielberg, an Academy board member, was planning to push for rules changes to Oscars eligibility, restricting movies that debut on Netflix and other streaming services around the same time that they show in theaters. Netflix made a big splash at the Oscars this year, as the movie "Roma" won best director, best foreign language film and best cinematography.
Delrahim cited Section 1 of the Sherman Act that "prohibits anticompetitive agreements among competitors." "Accordingly, agreements among competitors to exclude new competitors can violate the antitrust laws when their purpose or effect is to impede competition by goods or services that consumers purchase and enjoy but which threaten the profits of incumbent firms," Delrahim wrote. He added, "if the Academy adopts a new rule to exclude certain types of films, such as films distributed via online streaming services, from eligibility for the Oscars, and that exclusion tends to diminish the excluded films' sales, that rule could therefore violate Section 1." An Academy spokesperson said, "We've received a letter from the Dept. of Justice and have responded accordingly. The Academy's Board of Governors will meet on April 23 for its annual awards rules meeting, where all branches submit possible updates for consideration."
Delrahim cited Section 1 of the Sherman Act that "prohibits anticompetitive agreements among competitors." "Accordingly, agreements among competitors to exclude new competitors can violate the antitrust laws when their purpose or effect is to impede competition by goods or services that consumers purchase and enjoy but which threaten the profits of incumbent firms," Delrahim wrote. He added, "if the Academy adopts a new rule to exclude certain types of films, such as films distributed via online streaming services, from eligibility for the Oscars, and that exclusion tends to diminish the excluded films' sales, that rule could therefore violate Section 1." An Academy spokesperson said, "We've received a letter from the Dept. of Justice and have responded accordingly. The Academy's Board of Governors will meet on April 23 for its annual awards rules meeting, where all branches submit possible updates for consideration."
The problem comes in that being Oscar nominated or winning an Oscar is marketable, to the actors in the movies and to the studios for new movies with those actors in it. If a director/actor/etc is given a choice, they would likely want the option to be able to earn an Oscar for their work when it's Oscar worthy work. Following that trail, it then becomes harder for Netflix to make quality movies with major names because the actors don't get their rightful acclaim for the work. At that point, the Academy is supporting traditional studios to the exclusion of potential competition.
It's not like what I'm saying is a guaranteed to happen or anything, but the fact that it can happen means it's at least a concern. And since the Academy is run by the studios, they have a vested interest to prevent outsiders from gaining traction. As such, it would potentially fall under the Sherman Act like the summary mentions.
What's ironic about it, exactly? Monopolies aren't inherently illegal, so the line you quoted seems accurate.
It can be because the Sherman Antitrust Act says:
This award show is run via written and oral agreements -- i.e., contracts -- amongst members who are competitors and effectively operates as a trade organization. The Sherman Act does not include an "award show" exception, and I see no need for a snap amateur opinion on whether the Justice Department is needed in lieu of a professional opinion by persons qualified to practice antitrust law, i.e., the DOJ antitrust division.
Yes, it's quite a weak argument when you publicly categorize yourself as a trade organization for an exemption from taxation by the IRS.
How long until Netflix buys one of the traditional studios that supports the oscars?
That won't help if a rule "restricting movies that debut on Netflix and other streaming services around the same time that they show in theaters" comes into force. Netflix would have to buy enough traditional studios to have the votes to change the Academy's rules.