Was the Antitrust Action that Broke Up the Movie Studios Good for the Movies? Evidence from the Stock Market

The Paramount antitrust litigation was a series of eight actionsbrought by the Department of Justice (DOJ) beginning in 1938and ending in 1949 against the major motion picture studios.In the early cases the DOJ succeeded in changing industry contracts,but it took a decade of litigation to accomplish what the DOJwanted, which was to break up the studios and force them tosell their theater chains. We use stock market evidence to evaluatethe impact of events in the Paramount litigation on firm value.By the stock market's assessment, the Supreme Court decisionwas the major event. But the impact of this and other decisionson integrated and nonintegrated defendants, and on a nondefendant,does not support the view that the courts dismantled a successfulmonopoly; indeed, the contrary may be true.