Motion Picture Herald (Nov-Dec 1948)

TRUST TRIAL RKO INDEPENDENT CIRCUIT AGAIN, AS ONCE LONG AGO {Continued from page 13) remedy (competitive bidding) is impractical." That stopped Mr. Proskauer for a minute— but only for a minute. With a nod towards the bench, Mr. Proskauer stated : "The question of relief is up to you. You may find certain situations call for very partial divorcement." Whitney North Seymour, Paramount attorney, found inconsistencies in Mr. Wright's proposed findings. On the one hand, he pointed out, the Department of Justice would allow the defendants to come to court for permission to acquire theatres. On the other hand, the Department is pleading for full divorcement, he stated. Asks Court Examination Of Joint Ownerships Pointing out that Paramount's numerous percentage holdings were once 100 per cent holdings, but were knocked down to 50 and 60 per cent during the company's bankruptcy proceedings. Mr. Seymour asked for a court examination of each joint ownership held by the defendants with independent operators. John W. Davis, counsel for Loew's, told the court that he was very much afraid such an examination would have to be made. Tuesday he submitted a lengthy document concerning each of the theatres which the Department has announced it would attempt to take from Loew's. The Little Three defendants — Columbia, United Artists and Universal — opened their arguments in the high heat of stimulated anger, fear and perplexity. They, in effect, want to start the whole trial over again. The Supreme Court's abolishment of competitive bidding has left them wondering how to sell their product, they insisted. In the words of Edward Raftery, UA counsel, they "want to know how to sell our pictures without being dragged to the court house." Louis Frohlich, Columbia counsel, was heatedly of the opinion that "the industry is facing a disaster and I say this advisedly. Lawsuits are springing up night and day all over the country. Half a dozen lawsuits ould break every company in the industry." Seeks Elimination of Court's Trade Practice Provisions He wanted the District Court's injunctive provisions on film trade practices abolished. Cyril Landau, for Universal, argued that he should at least be permitted to come into court to ask for modification of the injunctions. It is the contention of these three companies that since the Paramount suit is now concentrating on the pros and cons of divorcement, that they, the non-theatre-owning defendants, have been left out in the cold ; that since the elimination of the "central arch" of competitive bidding it is "logical to assume that the entire system of Almost 20 years to the day that the KeithAlbee-Orpheum circuit became a subsidiary of the then newly-formed Radio-KeithOrpheum Corporation and grew to become RKO Theatres, Inc., the exhibition outlet of the company is again about to become an independent circuit. Dating back to the days of the late 1890's when vaudeville was the public's major entertainment interest and motion pictures were still in their infancy, the seeds of what was to eventually become RKO Theatres, Inc., were planted. Concerned were such names as Benjamin F. Keith, E. F. Albee and the Proctor and Orpheum circuits. B. F. Keith, vaudeville showman, who operated theatres in Boston, New York and elsewhere, introduced motion pictures into his Keith's Union Square theatre in New York on the evening of June 29, 1896, and shortly after his Boston theatres adopted a policy of using film as a standard portion of the variety program. His associate, J. Austin Fynes, who was instrumental in introducing the films to the Union Square audiences, had entered show business after a newspaper career in Boston and New York, including a stint as dramatic critic for the New York Evening Sun. E. F. Albee, a name destined to become even more prominent in the motion picture theatre world, was at that time general manager of B. F. Keith Enterprises. It was this same year, 1896, that Proctor's Pleasure Palace and Proctor's Theatre in Twenty-Third Street, New York, intro licensing motion pictures has been placed in a very dubious and uncertain state. . . ." With these opening statements out of the way, Judge Hand leaned over his high bench and. asked both sides what they thought about his appointing a master to hear the case. Mr. Wright reacted as though lie had been stung to the heart. His reply was a long one, adding up to "no." The court recessed. Monday afternoon Mr. Wright began his lengthy entry in evidence of interrogatories, of answers to interrogatories, of exhibits 480, 484, 487, etc., exhibits which provoked intense arguments from the defense. The defense attorneys — principally Mr. Caskey for Twentieth Century-Fox and Mr. Seymour for Paramount — found "numerous and serious" errors in Mr. Wright's documents concerning joint ownership. Judge Hand admitted all the documents until Mr. Wright came up with some affidavits from Republic, PRC and Monogram — affidavits purporting to detail the amount of revenue those companies had received from the affiliated theatres. The defense hit the ceiling. You can't, duced a film policy, while the Orpheum Circuit houses in the middle west were inaugurating a similar program. During the next 22 years as the circuits expanded and strengthened the popularity of motion pictures grew proportionately and came to overshadow the vaudeville which they were first intended to supplement. On January 28, 1928, the exhibition interests were brought together as Keith-Albee-Orpheum, with B. F. Keith as president. KAO acquired all outstanding stock of the B. F. Keith Corporation, Greater New York Vaudeville Theatres Corporation and the Vaudeville Collection Agency, some 80 per cent of each class stock of the B. F. Keith-Albee Vaudeville exchange, and at least 80 per cent of the common stock of the Orpheum Circuit, Inc. Nine months later, in October, 1928, after various companies were rumored to be making bids for the purchase of KAO, the Radio Corporation of America, looking forward to the development of sound pictures, was instrumental in forming Radio-KeithOrpheum Corporation, which became the parent organization, and taking control of the KAO concern and the Orpheum Circuit, Inc. Later, various other exhibition interests, including the RKO Proctor Corporation and the RKO Midwest Corporation, were taken into the parent company. Until the theatre interests are finally divorced from the production and distribution branches of the company all theatre properties are in or controlled by RKO Theatres, Inc. they said, judge the returns on a picture without knowing the quality. Judge Hand ruled against admission of; these affidavits on the ground they were 1 hearsay evidence and secondary evidence at r that. Tuesday morning all those documents that Mr. Wright had submitted were attacked by the defense. Mr. Davis submitted a motion to strike out that evidence on the ground that it was insufficient to modify the previous findings of the court. One by one, Paramount, Warners and 20th-Foxii seconded the motion. William F. Rodgers, MGM's general sales manager, was put on the stand by Mr. Davis and from the stand he detailed MGM's establishment of a competitive bidding system,, substantiating his statements! with numerous letters and telegrams he had sent to his sales staff. His statements were intended to prove that the independent was getting far more MGM product now than previously. The documents, said Mr. Davis, were be ing put into the record to prove that the' figures used by the Department of Justia in its plea for divorcement were outdated that the monopoly had been corrected, tha 16 MOTION PICTURE HERALD, NOVEMBER 13, 1941