Boxoffice (Apr-Jun 1939)

Record Details:

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"Not Applicable," So UA Pulls Out New York — Revealed in the committee’s letters to exhibitor leaders accompanying copies of the draft, the reason for the withdrawal of United Artists from the trade practice conferences was explained later by an authoritative company source, as follows: “There is nothing in the trade pact to which we subscribe. The cancellation privilege cannot apply to United Artists because pictures are not made or sold on the system general with other companies. Each producer makes three or four, and it is impossible in selling to provide for cancellations. Each producer’s output is sold independently. Score charges were dropped years ago. The company’s policy has never been to sell away from established customers: it never has had theatre affiliations, and has never threatened to build opposition theatres. “Anybody doing business with United Artists consistently knows we never do anything for which complaints can be made, particularly those being covered in the trade practice pact.” An official statement is expected from Murray Silverstone, head of UA, who is arriving in New York over the weekend. It is felt within company ranks that United Artists must explain its stand in view of the action of the committee in bringing the withdrawal to light. Text of Draft (Continued from page 26) time which it may have under a license agreement with respect to any features, the license fee for which is either a fixed sum or is computed in whole or in part upon a percentage of the gross receipts of exhibition with a fixed minimum sum guaranteed. (2) Features Unsuitable for Preferred Playing Time. If a distributor shall exercise the right to designate features for preferred playing time which it may have under a license agreement with respect to any feature licensed solely on a percentage basis, which is claimed by exhibitor to be unsuitable for such playing time and if exhibitor shall give distributor written notice of his objections thereto and the reasons therefor within seven days after the mailing of notice of such designation in case of a first run in a city in which an exchange is located or in any other case within seven days after the close of its first exhibition in the exchange city from which exhibitor is served or the mailing of the notice of designation, whichever is later, the question of such suitability shall be determined by agreement between distributor and exhibitor or, lacking such agreement, by arbitration. Unless distributor rejects the claim of exhibitor by mailing notice to exhibitor within seven days after the mailing by exhibitor of such notice of objections as above provided, distributor shall be deemed to have withdrawn such designation. Should distributor, however, reject such claim, exhibitor shall commence arbitration proceedings to determine the dispute within seven days after the mail ing of such notice of rejection. If the feature is determined, by agreement or arbitration, to be unsuitable for the designated preferred playing time, or the designation thereof be deemed withdrawn as above provided, distributor may, at its option, either (a) designate the feature to be exhibited upon the same license terms on other days of the week or (b) then or thereafter substitute another feature to be exhibited on preferred playing time upon the terms designated for the feature objected to; in the latter case the license fee for the feature originally designated shall be such as may be designated by the distributor within its right under the license agreement. Nothing in this Section (2) shall decrease or increase the number of features in each bracket as set forth in the license agreement. V. Some Run Available To meet objections of certain exhibitors to so-called “exclusive selling,” an exhibitor shall be able to obtain from a distributor a run of its features in any situation, the run to be designated by the distributor, provided (a) distributor and exhibitor can mutually agree upon the number of features to be licensed and other terms and conditions: < b) the exhibitor’s theatre <s) (i) is not of an obsolete character, (ii) is in good condition and (iii) is operated under a policy that is not destructive and (iv) is operated under a policy which will not substantially reduce the distributor’s revenue from any other run7 ; and (c) exhibitor is of good reputation as a theatre operator and customer or, if he has not been an exhibitor theretofore, is of good reputation and financially responsible. Any dispute arising under provisos <b) or (c) hereof shall be subject to arbitration. No dispute under proviso (a) hereof shall be subject to arbitration; but each distributor states that it will be its policy not to request unreasonable license fees or other terms or conditions from an exhibitor for the purpose of defeating this Article V. 7A policy shall not be deemed destructive or one which will substantially reduce such revenue if it is a policy established under methods of competition normal and fair in such situation. VI. Regular Customer To meet objections of certain exhibitors to so-called “selling away to a circuit,” a distributor will not refuse to license its features to its regular customer who is not a “circuit customer,”8 in order to license them, for the same run in the same competitive area, to another exhibitor for the sole reason that such other exhibitor is a circuit customer, provided such regular customer (a) has substantially performed his previous license agreements with the distributor, (b) maintains and operates his theatre in a modern manner, and (c) is financially responsible. Any dispute as to whether a distributor has so refused to license its features to such regular customer shall be subject to arbitration. Should distributor elect to license its features to an exhibitor (other than its then current customer) who is a circuit customer, distributor shall, if its then current customer is not a circuit customer, give him notice by telegraph of its election so to do. Should such current customer fail to commence arbitration proceedings within five days after the sending of such notice, he shall be deemed to have waived all claims, if any, in connection with such features under this Article VI. VII. Short Subjects, Newsreels, etc. No exhibitor shall be required to license short subjects, newsreels, trailers, serials, re-issues, “Westerns” or foreigns,9 (hereinafter collectively referred to in this Article as “Shorts”), as a condition of licensing other features. An exhibitor shall have no right to assert any claim that the licensing of such features was so conditioned unless he shall have mailed to the distributor at its Home Office notice in writing of such claim and the grounds therefor within forty-eight hours after delivery by exhibitor of his signed application for such “Shorts.” Any dispute as to whether the (Continued on page 28) 8A “circuit customer,” as that term, is used in Article VI, is a customer who is, or is a. part of, a circuit, a buying combine, a booking combine or a cooperative. 9“Westerns“ and foreigns as defined in Article I, Section (1). To Other Exhibitor Leaders New York — The letter below went to Ed Kuykendall, president of MPTOA, and to other exhibitor leaders who participated in the trade practice conferences. Signed by W. F. Rodgers for the distributors joint committee, the letter follows: “Please refer to my letter of December 1, 1938, under cover of which we sent you a memorandum prepared by us embodying the trade practice proposals resulting from the conferences between the distributors and various exhibitor groups representing most of the theatre operators throughout the country. That memorandum has been the basis of further conferences, and a revised memorandum has been prepared by us in me light of the discussions had at such conferences. We enclose the revised memorandum herewith. “The original memorandum called attention to the fact that various matters in connection with arbitration and arbitration proceedings had not been fully discussed. In some of the subsequent conferences there has been discussion of arbitration. The revised memorandum enclosed herewith provides for arbitration of specified matters. We also enclose a proposed basis which we prepared some time ago upon which the arbitration machinery may be set up. We realize that this is not complete and further elaboration will be necessary, but we believe that the statements of principle contained in it and in the memorandum itself will readily furnish the foundation for the machinery desired. “Since our discussions we have been notified by United Artists Corporation that it has withdrawn from participation in the conferences. “Following the same course as before, we are sending a copy of this letter and its enclosures to the Department of Justice in accordance with assurances of counsel that the Department would be kept informed of the results of our industry conferences. “If the accompanying revised memorandum substantially expresses your understanding of these proposals, we renew our previous suggestion that a joint conference be held with the Department of Justice at the earliest possible date for the purpose of obtaining its approval of these proposals and of considering methods of putting them into effect.” BOXOFFICE :: April 1, 1939 27