Judge Deals Studios Defeat, Restores Movie ‘Screeners’

A federal judge on Friday restored one of Hollywood’s most cherished perks -- the awards season movie “screener” -- as he dealt a sharp setback to the major motion picture studios and their chief lobbyist, Jack Valenti.

Bringing an unexpected plot twist to the drama that has consumed the film industry for weeks, U.S. District Judge Michael B. Mukasey issued a restraining order that prevents the studios from enforcing their ban on sending out free DVD or videocassette copies of their films to awards voters, critics and other opinion makers.

Mukasey said he did not question “the sincerity” of the Motion Picture Assn. of America in its effort to combat rampant piracy of films when it adopted the policy against sending out screeners. But he nevertheless sided with a coalition of independent filmmakers who argued that they would be irreparably harmed by the policy because “little movies” such as theirs depend on the screeners to compete for the awards that often are key to their success.

“Let freedom ring!” said Rick Juckniess, one of the lawyers for the “indie” filmmakers, as Mukasey finished reading his decision.

MPAA President Valenti, whose courtroom testimony ultimately helped persuade the judge to rule for the other side, has promised to appeal, though that action may come too late to make a difference this year.

Mukasey’s ruling arrives in a season of rancorous bickering in Hollywood. Movie piracy remains as big a problem as ever, with many new or yet-to-be-released titles popping up daily on the Internet. And awards-season politicking promises to be intense, with the reversal of the screener ban and an earlier-than-usual Oscar show Feb. 29.

“As to where this leads us all, I don’t really know,” said Frank Pierson, president of the Academy of Motion Picture Arts and Sciences, whose outraged voting membership, even before the ban was lifted, had received an exemption that allowed it to get screeners.

Pierson wasn’t alone. All over Hollywood, where the screener ban has dominated lunch conversations and fed the rumor mill since it was handed down, confusion reigned.

Some studios, like Miramax, Sony Pictures Classics and DreamWorks, were poised to start sending out screeners of their best bets. Others, such as Focus Features and Fox Searchlight, were said to be on the fence about doing so with their prized pictures, while Universal Studios decided against distributing screeners of its live-action holiday film, “Peter Pan.” Warner Bros. is sticking with its plan to send tapes of movies only to Oscar voters, and was working overtime to churn out VHS copies of Clint Eastwood’s “Mystic River.”

The major studios may be in something of a Catch-22.

Of course, the judge’s ruling does not force them to hand out screeners -- it merely restores the option. But the decision could be difficult, according to some insiders. If they do send them, they risk appearing to undermine their own argument about the threat of piracy. If they don’t distribute them, they risk having their prized films overlooked.

The logistics of ramping up the production of screeners may also prove difficult.

Executives at two companies that make discs and videotapes for the studios said a late surge in demand could pose problems -- especially if anti-piracy measures such as watermarks were required.

“If it’s normal DVD or normal VHS, there are no capacity constraints,” said David Rubenstein, president of Cinram Americas. “If it’s watermarked, that’s a different story.”

It takes significantly longer to produce watermarked DVDs, Rubenstein said, because they have to be burned one at a time, rather than pressed by high-capacity duplicating machines.

Critics groups, the Hollywood talent guilds and the Golden Globes’ Hollywood Foreign Press Assn. rejoiced at the judge’s ruling. The Chicago Film Critics and Los Angeles Film Critics associations said they were considering reinstating their awards, which had been canceled to protest the ban.

New York magazine’s Peter Rainer, head of the National Society of Film Critics, said the decision had created a level playing field.

“This is very good news for all people interested in honoring excellence in movies in a fair way,” he said. He said that although critics prefer to see films in theaters, the screeners are an aid during the rush of year-end releases.

Rainer also saw the ruling as a sign of the MPAA’s deteriorating status in the film industry: “It’s a large chink in the armor.”

The lawsuit brought to light a nasty intra-family feud in the industry, with the major studios at odds with their own art-house divisions. Private e-mails from producers and the heads of studio specialty divisions were on display in court, and executives were asked to take the stand. Although most of the specialized film division chiefs privately lambasted the screener ban, in the end only Harvey Weinstein, head of Walt Disney Co. subsidiary Miramax Films, filed a declaration supporting the independents’ position.

“The problem was the process” and how the screener ban decision had been handed down, Weinstein said Friday, adding that he intended to initiate a study, with the support of other specialized distributors and input from the MPAA, on how many awards-season screeners are actually pirated. “I think there should be a more open process, and then find a way that makes sense for everybody. Nobody likes to be legislated from Mt. Olympus.”

Judge Mukasey cited several points in Weinstein’s declaration siding with the coalition of independent filmmakers.

The judge also accused both sides of going a bit far in their rhetoric: the association of major studios for raising the specter of “impending doom of the motion picture industry” because of piracy, and the independent filmmakers for suggesting that the anti-screener policy had been motivated by the studios’ displeasure at all the prizes won by independent films in recent years. Mukasey called that conspiracy theory a “paranoid fantasy,” even if the limit on screeners might have helped the bigger-budget studio films at awards time.

But he found the MPAA, the trade organization representing the major studios, guilty of “anti-competitive conduct” and “unreasonable restraint of trade” under federal antitrust laws.

Valenti’s own testimony was cited by the judge as undermining the studios’ argument.

When he took the witness stand Wednesday, Valenti argued that it was essential to have an industrywide policy on screeners and not to let the studios decide individually. The problem was their extreme competitiveness -- if one or two started sending out screeners, “everybody would follow suit,” Valenti testified, “to get a momentary advantage.”

On Friday, though, the judge said that explanation backed up one of the independent producers’ contentions -- that screeners in fact can make a difference in contests. Mukasey said the studio bosses who couldn’t resist joining the pack would be making a reasoned decision that sending out award screeners would be worth the piracy risk.

Valenti said in his testimony that the new policy had been intended as a one-year experiment, and that he hoped to assemble all the interested parties -- including the independent filmmakers -- to help write new rules next year. The judge, for his part, left open the possibility that some industrywide restrictions might be acceptable, including a requirement that all contest screeners be videotapes, not DVDs, which are easier to duplicate.

The moment Mukasey indicated which way he would rule, one producer, Ted Hope, rushed from the courtroom to call his distributors and see how quickly they could begin mailing out screeners of what he considers his prize candidates this year, “American Splendor” (distributed through Fine Line Features) and “21 Grams” (Focus Features).

“I just hope my distributors are poised to act,” Hope said after the court session.

Despite the judge’s acceptance of the studios’ anti-piracy rationale, some didn’t buy it. Bob Werden, who was publicity coordinator for the Academy Awards for 15 years, said the now-overturned screener ban may ultimately end up harming the major studios in the eyes of Oscar voters.

Lieberman reported from New York; Munoz and Welkos from Los Angeles. Times staff writers Jon Healey and Patrick Day in Los Angeles also contributed to this report.