The specialty divisions of the major studios aren’t what they used to be.  In fact, some of them aren’t at all.  This past May, Warner Bros. – which is about as big as an entertainment conglomerate can get – shuttered its two boutique houses, Warner Independent Pictures (Good Night and Good Luck) and Picturehouse (La Vie en rose).  This was only a short while after Warners had closed down another outpost of its empire, New Line (Lord of the Rings).  Similar operations at other majors are still open for business, but in most cases their lists of releases are shrinking.

            The usual corporate explanation runs this way:  It’s more expensive than ever to release a film, so no one can afford to fund a large production slate.  Not only that, but new technologies require new investments and, hey, who knows whether people will even want to see a movie in a theater when they can watch it on their cell phone (or whatever)?

            This makes it all sound like the studios are responding to changes in that great capitalist chimera, the “marketplace.”  Not a chance that the massive entertainment companies are actually creating the conditions under which they not only operate, but flourish.

            Let’s suppose, though…

            Say that about 20 years ago, the public’s appetite for foreign films (waning though it might have been) was further stimulated by a seemingly sudden increase in independent film production (sex, lies, and videotape; Drugstore Cowboy; Do the Right Thing).  Smalltime exhibitors – regional chains, single screen operations, left-behind urban multiplexes and so forth –could draw an audience without recourse to mainstream films.  They could thrive thanks to a cultivated clientele. 

            Here, you have to remind yourself of how studio executives think.  I was talking to a young French filmmaker once, and she told me about a conversation she had had with v.p. from a Hollywood studio’s international marketing department.  She was complaining to him that American movies already took up 80 percent of the screens in France, making it difficult for French films to compete for the leftovers.  What did the studios want, anyway?  “The other twenty percent,” he replied.

            This is the perspective Hollywood brought to bear on this minor (in dollar terms) competition from the newly rising independent market and what remained of its foreign-language counterpart.

            So a couple of things happened.  First, studios either launched or bought their own independent divisions or went into partnership with an independent company.  Suddenly, agents and marketers were showing up in force at places like Sundance and throwing ridiculous sums of money at small marginal films.  While an occasional movie could make some money under those circumstances (The Blair Witch Project), far more often they tanked (Happy, Texas).  Yet the studios and their allies kept pouring it on, overpaying for one dubious effort after another.  Wow, hip indie insiders smirked, these suits just don’t get it.

            Sure they didn’t.  A lot of people didn’t seem to notice that, while these studio pick-ups weren’t making any money, they sure were tying up an awful lot of screens out there.  Additionally, the indie market had so succumbed to studio-induced inflation, that the real indie distributors couldn’t compete one-on-one for the hot films.  Luckily, the legit indies almost always were savvier when it came to the sheer quality and market viability of movies, so they got their hands on some very high-quality films.  But ultimately, the prices rose so high and the screens were so tightly booked, that they couldn’t compete.  It’s a tribute to these film lovers that whenever their companies folded they went out and started new ones, but it couldn’t last forever.

            A similar, though not exactly identical, process was going on in the foreign film sector.  The upshot was the same, however.  The major studios’ specialty divisions corralled the bulk of the business.

            There are still some small independent distributors out there, running on grit and love for movies.  But they are as Pompeii to Mt. Vesuvius.

            To keep up the ancient allusions, let’s refer to this latest development as the Carthaginian solution.  Having driven out non-studio-affiliated distributors, the studios now close down their ersatz mom-and-pop shops.  All the exhibitors who had counted on a steady influx on non-mainstream films suddenly have nothing to thread through their projectors.

            What will they do?  They’ll book mainstream “product” from the majors, that’s what they’ll do.  And they’ll do it because there’s nothing else, or almost nothing else, for them to choose from.

            Maybe the studios haven’t locked up that elusive “20 percent” in France yet, but by closing the distribution pipelines to everything but their own brand of big-budget vanilla, they’re pretty close to nailing down 100 percent of the U.S. market.

            I guess that’s why you go to business school and listen to the professor talk about cartels and predatory pricing.  And it’s why you smile when the professor tells you such behavior is unethical – with a great big wink.