DOJ Warns Academy New Netflix Rules Could Violate Laws

As the Academy of Motion Picture Arts and Sciences mulls over rule changes that would limit the eligibility of content from Netflix and other streaming services, the U.S. Department of Justice weighed in with a warning that doing so could violate competition law and raise antitrust issues. Academy board member Steven Spielberg reportedly has encouraged changes to Oscar eligibility rules, prompting the DOJ’s response. At CinemaCon, movie theater owners are also discussing how Netflix is changing the landscape.

Variety reports that it was able to obtain a letter from the DOJ’s antitrust division head Makan Delrahim to AMPAS chief executive Dawn Hudson in which he stated his fear that the language of any new rules could be written “in a way that tends to suppress competition.”

Delrahim cites the Academy as “an association that includes multiple competitors in its membership,” and rules that “eliminate competition without procompetitive justification … may raise antitrust concerns.” Delrahim also cited the Sherman Act’s Section 1 that “prohibits anticompetitive agreements among competitors.”

The Academy acknowledged it has received the Justice Department’s letter and noted that “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.” Spielberg stated that, although Netflix and its ilk have raised the quality of TV content, “once you commit to a television format, you’re a TV movie … If it’s a good show, you deserve an Emmy, but not an Oscar.”

At this year’s Oscars, Netflix’s movie “Roma” won the awards for Best Director, Best Foreign Language Film and Best Cinematography.

Reuters reports that, at CinemaCon, Netflix is top of mind for everyone. Netflix’s insistence on making some of its movies available via streaming at the same time it’s in a movie theater has “upset big movie chains,” who refuse to change the traditional business model and demand a window of exclusivity. National Association of Theatre Owners president & CEO John Fithian insisted that “Netflix and theaters can happily co-exist, citing data that showed the biggest consumers of streaming video visit theaters more often.”

Fithian also credited Netflix with reviving interest in documentaries, but noted that a “robust theatrical release” is necessary to help a movie reach its “full potential.” “Crazy Rich Asians” director John Chu stated his movie “would not have had as big an impact if it had debuted on a streaming service.”

Motion Picture Association of America chief executive Charles Rivkin and Fithian revealed that “box office receipts hit a record $11.9 billion in the United States and Canada in 2018 even as Netflix released dozens of original movies.” “Streaming is not a problem!” said CinemaCon managing director Mitch Neuhauser, who referred to how digital services are encouraging people to stay home. “We’ve got to get out of the house. We are talking about becoming a society of hermits!”