The Justice Department takes on Big Hollywood

OPINION:

Conservatives are scratching their collective heads as the Department of Justice has ramped up its efforts to review the 70-year-old restrictions that prevent Hollywood elites from getting richer off its predatory business practices. Specifically, the DOJ is investigating the present-day utility of the antitrust settlements between the government and monopolistic movie theaters and music collectives. These agreements have protected consumers for decades, and it would make little sense economically or politically to abandon them today.

The American people are fully aware of Hollywood’s sense of entitlement and hatred for free markets. During the 2016 election cycle, over 90 percent of the film and music industry’s political donations went straight into Democrats’ pockets. Stars from Madonna to Mark Ruffalo have called for everything from impeaching the president to blowing up the White House.

Despite their clients’ professed hatred for the administration, Hollywood lobbyists are seemingly working behind the scenes to convince the White House of the need to remove their DOJ regulations. However, the truth is that these elites’ business practices are just as anti-free market as their rhetoric and therefore require government restrictions.

Years ago, Hollywood executives of the major motion picture companies colluded to monopolize both the process of showing and distributing films. They did this by banding together, working hand-in-hand to fix prices and eliminate independent competitors.

While the anti-free market movie executives were busy building their artificial empires through threatening small movie studios and independent theaters, music publishers — which typically compete against one another — joined forces into ASCAP and BMI, two mega-organizations that control the performing rights licenses to over 90 percent of the tunes on the radio. Their combination struck fear into the hearts of businesses, nonprofits, and event organizers that faced the near-impossible task of securing reasonable pricing for their music licenses.

To avoid a forced break-up of their companies, the movie studios and the government reached settlement agreements mandating each entity choose between either distributing or exhibiting movies. The DOJ’s music industry agreements, enacted around the same time as those in the movie industry, stipulate that ASCAP and BMI license their entire repositories at the same fair market rate to everyone, free of discrimination, with a rate court deliberating cases of dispute.

For over three-quarters of a century, these DOJ agreements have helped to create a fairer playing field in the business world, where every establishment — regardless of size — can afford necessary operational expenses and compete. Which raises the question: If these governmental settlement agreements spanning across Hollywood have worked so well for so long, why is the DOJ even thinking of scrapping them?

While the mediums and tastes of consumer entertainment have often changed from the 1940s to the present, the contemporary portrait of the industry behemoths’ anti-competitive tendencies still looks untouched from the one painted on the day of the agreements’ original implementation. For example, just two years ago, one of the music monopolies paid $1.75 million to settle a Justice Department civil contempt claim, which arose due to the reported violation of its 70-year-old DOJ agreement. These Hollywood elites are as unhinged as they’ve ever been.

Some critics point to the changing entertainment market landscape as grounds for removal of these government restraints. Their reasoning misses a crucial point.

Today, there may be more competition in the Hollywood sphere. New technology — from television to Netflix to other digital streaming services, licensing organizations, and viewing platforms — may now curtail some of their former market dominance. But when changing weather patterns incite fewer roadway accidents, do regulators eliminate speeding laws?

Of course not. The worst thing we can do as a nation is implicitly condone unacceptable behavior through rash deregulation. This point is especially valid when the bad actors’ unwelcome tendencies haven’t gone anywhere. Once the rain comes tumbling down again and the opportunity presents itself, the same adverse outcomes will undoubtedly occur.

In the governmental realm, Hollywood isn’t very good at acting. Both the movie and music industries are, whether intentionally or not, very transparent with their political, business and financial interests. One would think that when push comes to shove, this reality will make for a smooth, predictable DOJ decision that keeps small businesses protected from the wrath of these anti-free market elites. Or at least one can hope.

• Andrea Kaye is host of the “Andrea Kaye Show,” heard on KCBQ in San Diego, California.