Until 1950 almost all theaters were owned by the producers. Only their films were widely shown, and close cooperation between the producers, the Code Administration and the American Legion ensured a well controlled content. Then, in 1950, this censorship system was shaken by a Supreme Court ruling in United States v. Paramount Pictures that ownership of theaters by motion-picture producers was a violation of antitrust laws. The Supreme Court decision quickly spawned independent theaters whose owners were more willing to show films produced outside the studio system, whether or not the films had the approval of the Code Administration or the American Legion. Cold War politics still prevented a candid examination of major social and political issues, but controversial films like The Moon Is Blue, which contained sexually suggestive dialogue, and The Man with the Golden Arm, which addressed the sensitive issue of drug addiction, were shown widely and were well received by the public, despite being denied the code's seal of approval.

In Joseph Burstyn, Inc. v. Wilson (1952) the Supreme Court further undercut the system of film censorship. The Italian film The Miracle had been attacked by the Catholic Church as sacrilege. The Miracle, based on an original story by Federico Fellini, tells the tale of a peasant woman who, under the influence of wine and religious emotion, permits a stranger, whom she takes to be Saint Joseph, to seduce her. She subsequently bears a child whom she regards as immaculately conceived. Francis Cardinal Spellman condemned the film as "a vile and harmful picture," "a despicable affront to every Christian" and "a vicious insult to Italian womanhood." In a statement intended to go beyond the Catholic community, Spellman summoned "all people with a sense of decency to refrain from seeing it and supporting the venal purveyors of such pictures." (Hurwitz, p. 248)

The film was subsequently banned in New York City and New York State. The bans were challenged in court, and in Joseph Burstyn, Inc. v. Wilson the Supreme Court ruled that motion pictures were entitled to the guarantees of freedom of speech and press. In particular, the Court ruled that a movie cannot be banned on the charge of sacrilege, and the ban on The Miracle was lifted.

When Geoff Shurlock was appointed director of the Production  Code Administration in 1954, he concluded that unless the association dealt more flexibly with motion-picture producers, the code would soon be discarded as an irrelevancy. He oversaw an amendment to the code that removed taboos on miscegenation, liquor, and some profane words, but independent producers said it was not enough. Several producers, led by Samuel Goldwyn, demanded that the Motion Picture Code be revised, causing one author of the code to insist that this would be "tantamount to calling for a revision of the Ten Commandments." Nevertheless, a new code was published in December 1956. It began by stating three principles:

1.         No picture shall be produced which will lower the moral standards of those who see it. Hence the sympathy of the audience shall never be thrown to the side of crime, wrong-doing, evil or sin.

2.         Correct standards of life, subject only to the requirements of drama and entertainment, shall be presented.

3.         Law -- divine, natural or human -- shall not be ridiculed, nor shall sympathy be created for its violation. (Leff, p. 233)

Controversial subjects like drug addiction, prostitution and childbirth could now be treated "within the careful limits of good taste," but prohibitions were added on blasphemy, mercy killing, double entendre, physical violence, and insults to races, religions and nationalities. Mention of the word "abortion" was specifically forbidden, as was any "inference" of sexual perversion. Ministers of religion were never to be portrayed as comic characters or villains because "the attitude taken toward them may easily become the attitude taken toward religion in general." (Leff, p. 233)

The ACLU described the new code as harsher than the old one, and many film companies responded by creating subsidiaries that were exempt from the rules imposed on members of the Motion Picture Association. Through such subsidiaries, the studios were able to distribute pictures that could not acquire the seal. In addition, most foreign-film importers bypassed the Production Code Administration. (Leff, p. 233)

When a series of Supreme Court cases during the 1960s suggested that carefully crafted state laws could constitutionally prevent minors from attending certain movies, Jack Valenti, president of the Motion Picture Association of America (MPAA), quickly generated a system of  classifying movies according to appropriate age groups. Valenti's prompt response may have preempted state legislation that would have imposed even more heavy-handed classification.

The new ratings system began on November 1, 1968, and the men who once enforced the production code now assumed responsibility for the new Code and Rating Administration. The ratings were nominally voluntary, with relatively flexible guidelines. The "G" rating was for general audiences of all ages. The "M" rating was for adults and mature young people. (Within a few years the "M" rating was changed to "PG," meaning Parental Guidance.) Movies rated "R" were not to be viewed by persons under sixteen years of age, unless accompanied by a parent or adult. The "X" rating meant that under no circumstances was a person under sixteen (later raised to seventeen) to be admitted to the theater. Such pictures were denied a seal.

Directors frequently found themselves carefully walking the thin line between "R" and "X" or "PG" and "R." Aaron Stern, director of the Code and Rating Administration, told movie producers that they were allowed to show love scenes, "but as soon as you start to unbutton or unzip you must cut. Afterward, you can show the two in bed, clothed. Anything else and you are going out of the PG rating." (Radnitz, 1990)

In the 1980s, the MPAA created a new rating, "PG-13," that was to include movies between "PG" and "R." Still, many in the film industry regarded the continuing pressure to produce films to fit a given rating as tantamount to censorship. In 1990 New York Supreme Court Justice Charles Ramos wrote an opinion describing the rating system as "censorship from within the industry rather than imposed from without, but censorship nonetheless." Justice Ramos concluded, "The rating of X is a stigma that relegates the film to limited advertising, distribution and income." (Radnitz, 1990)

In 1990 the MPAA replaced the "X" rating with a new "NC-17" rating, but it was a change in name only, intended to remove the taint of "X." Among other things, the advertising ban on X-rated films, imposed by major newspapers and television stations, was to be lifted for "NC-17" films; however, some video rental companies refused to buy "NC-17" movies and some theater chains refused to show them. . .