Listen: Disney, Supreme Court, Eric Gordon discussed on Marketplace Morning Report with David Brancaccio
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Vertical integration. What happens when single current company owns everything from the Hog farm armed the hotdog factory to the hotdog cart at a speech to the American Bar Association yesterday? The head of the Justice Department's anti-trust Division Mkhondo Rahim says. He will push to end the old ban on studios owning theaters Erik. Gordon a professor at the University of Michigan's Ross School of business and a former antitrust lawyer lawyer himself. Hello Eric. Good Morning David. I think you teach this to your students. There's a reason Twentieth Century Fox Columbia Warner Brothers. Disney don't own own those AMC bow tie or clearview cinemas. It goes way back. It goes way back to the days when fix prices set minimum in prices like favor the theaters to show their own movies. Not somebody else's movies and they used their power our overall to force other theater owners to do what's called block booking block booking is where you're forced to take the dogs along with the good good movies. I see so then accord intervene. There is this agreement call. The consent decree do not do that. But now we have the Department of Justice suggesting adjusting seventy years later. It's time to do away with that. What's different in the landscape that might lead one to Make this kind of change. We have a lot of different ways ways of getting entertainment including filmed entertainment. And now the big thing now is streaming but since the days of the decree we got television. We got cable we got over the top. It's not just over the top movies but over the top distribution so a lot of things have changed changed but you know just because a lot of things have changed doesn't mean the problem of big powerful companies has gone away by the way over the top is when let's say Disney has an APP that you press and that's how you get the content so just it's stated its intention but a court would have to review this. This doesn't just happen. Yes the decree is the result of the settlement of a prior litigation. This old old litigation the DOJ can't just go in and say okay. Hey we think it's in the public interest to terminate it. It has to get a court to agree to that. I think that will be fairly easy. It's going to to go to the court in New York and you may remember that the last time the DOJ was in court fighting on the other side saying that. At and T.. and Time Warner should not combine the court said Oh things have changed a lot. They're all all these new ways of getting content so government you lose. We're going to allow the merger. I think that the OJ will have a pretty easy day in court. I think maybe someday soon we'll see Disney theater or a net flicks theater. You know more likely net flicks. Here's an interesting historical stoorikhel quirk. Disney could own theaters all along because Disney was not part of the consent decree but they never have opened theaters. What they have done on is Disney plus direct streaming? So you know the days of being powerful because you own the actual physical movie theaters. Those days may be over over. Eric Gordon is a professor at the University of Michigan's Ross. School of Business Eric. Thank you my pleasure. David and after months of attacking the head of the US Central Bank president trump says he's had a quote very good and cordial meeting yesterday with Fed Chair. Jerome Powell the president believes us. Interest rates have been set too two high compared to competitors in Europe and economic downturn has prompted policy makers to create stimulus with rates so low there negative. According to the Fed Powell told old the president. His team will continue to support maximum employment and stable prices based on quote careful objective in non-political analysis in New York. I'm David Brancaccio. This is marketplace morning report from APM American public media this marketplace. PODCAST is brought to you by the capital one spark cashcard offering unlimited. Two percent. cashback on all of your business purchases learn more at capital one dot com capital one. What's in your wallet?."