Motion Picture News (Nov-Dec 1925)

November 14 , 192 5 F. P. L. Denies Monopoly Charge of Trade Commission Brief Brands Action As Lurid Melodrama MOTION picture producers, as manufacturers, have a right to sell their products "directly to t he consumer without the interposition of either wholesale or retail middlemen," it is declared in a brief filed with the Federal Trade Commission this week by the Famous Players-Lasky Corporation in answer to the brief recently filed by the commission's counsel in which the issuance of an order requiring the respondents in the case to separate their exhibiting activities from those of production and distribution and the cessation of block booking was asked. Some six hundred printed pages are required to set forth the company's statement of the case and their arguments in refutation of the commission's counsel's charges, which are characterized as a lurid melodrama spun by counsel for the commission. Emphatic denial of the existence of any monopoly, made impossible, it is declared, by furious competitive conditions, is contained in the brief, together with defenses of the practices assailed by the Government. The charges of the commission cannot be sustained, it is declared, because the respondents in the case are not exercising a monopoly and have no prospect of doing so. On the contrary, it is shown, FamousPlayers produces only about oneeighth of the total motion pictures brought out in this country, destributes about the same percentage, and is interested in less than one per cent of the motion picture theatres, which includes about one-fifteenth of the so-called "key city first runs." "While the brief of commission's counsel contains constant references to the control and domination of Famous Players-Lasky Corporation and its size," it is charged, "neither the examiner nor commission's counsel ever directly gave the commission any idea of the size of competitors or of the size of. the industry as a whole. Indeed they vigorously suppressed all efforts on the part of respondents' counsel to show these facts after the respondent had heen compelled to produce figures showing their own sue and growth." The same conditions apply to the control of star actors, it is asserted, the respondents never having in their employ more than one-third of the stars "of any class, character, sex or description." On the contrary, eleven other producing-distrihuting organizations and the stars in their employ are Darned, and it is declared that "most of these companies, directly or by means of subsidiary corporations, also distribute pictures produced by others. "There are about 100 smaller producers who d'stribute their product through at least 40 State-rights distributing organizations, each of which maintains from one to ten exchange offices in different parts of the country. "The examiner seeks to create the impression that Famous Players-Lasky Corporation is an organization of tremendous size, which has undergone tremendous growth since 1918. He finds that its outstanding common and preferred stock has doubled since 1018; that its surplus has increased ten fold; that it now pays twice as much out in dividends as it did formerly; that its profits in the last four years have increased 33 1-3 per cent; that the value of its physical equipment, including land and buildings, has increased forty-fold between 1917 and 1923, and its tangible assets have trebled between 1918 and 1923. This statement, standing as it does in a vacuum, is worthless. What have its competitors been doing? The mere and absolute size of the respondent constitutes no violation of either the Sherman act or Section 5 of the Federal Trade Commission act." The brief denies that the United Artists had difficulty in finding a satisfactory market for their pictures because of control of first-run houses by Famous Players, and calls attention to the fact that statements to this effect were made only by Mary Pickford, that the sales representatives of her organization contradicted her and that she, herself, finally admitted that she must have been misinformed. Naturally, it is declared, the organization would give preference to its own pictures, all other things being equal. But, it is asserted, "while we insist that Famous Players-Lasky Corporation has the absolute legal right to devote all of the time of all of its theaters to the showing of its own pictures, the fact is that the sreat majority of the time of the theaters in which it has an interest has been taken up in the exhibition of the product of its competitors." The commission has no more right to call upon the respondents to divest themselves of their exhibiting facilities than it has to call upon any manufacturer to discontinue the operation of retail establishments through which hjs product is sold to the public, it is intimated in the brief, in discussing the arguments of the commission's counsel in favor of separation of producing and exhibiting activities. "A motion picture producer like any other manufacturer, may lawfully sell his product directly to the ultimate consumer and may lawfully own the facilities, tbit is, theaters, necessary for such sale," it is contended. Meighan Gives Jewish Fund $1,000 ADOLPH ZUKOR, chairman of the Motion Picture Division in the $4,000,000 drive being made by the Federation of Jewish Philanthropies presided at a meeting during the week of his sub-committees to discuss plans for raising the quota assigned to the division. Zukor's initial announcement to his fellow leaders was of a $1,000 contribution made by Thomas Meighan, an actor not ox the Jewish faith. Meighan also offered to donate his services in any way. A number of addresses were made in addition to that of Mr. Zukor, the other speakers being Maurice Goodman, representing the attorneys; J. P. Muller for the film salesmen; A. Weinberg for the screen advertisers; Julius Tannen for the actors, and J. B. Basson for the motion picture operators. Following the meeting a motion picture was shown called "Human Dividends, which depicted the work of the 91 charities cared for by the Federation. Such a segregation would revolutionize the motion picture industry, and would require the respondents to divest themselves of property valued at $100,000,000, but such an order, it is pointed out, "would require like action against substantially every one of the larger and better known producers and distributors, the undisputed evidence being that integration of exhibition with production and distribution has been a common practice from the very inception of the industry. Oral argument, covering the questions raised in the commission's counsel's brief, will be held November 24 and 25. In view of the determined fight which has been waged by the respondents, the indications are that if the commission's decision upholds the charges the case will be carried to the courts and that the United States Supreme Court eventually will be asked to pass upon the powers of the commission arbitrarily to label an organization monopolistic and order it to divest itself of property acquired in the course of business. The Supreme Court's decision in the Eastman Kodak Company case, soon to be heard, would undoubtedly serve as a precedent should the Famous Players case go to the courts on an order by the commission ordering the disposition of theaters. In that respect the two cases would be very similar. In the Eastman case, the commission ordered the company to dispose of its three laboratories, which were kept idle under an agreement with independent laboratories whereby the independents were to use American-made film exclusively. The circuit court of appeals held that the Federal Trade Commission was not empowered by law to order a citizen to dispose of property acquired in the course of business, and the commission appealed to the Supreme Court.