Variety (May 1939)

18 VARIETY PICTURES Wednesdaj, May 3, 1939 U. S. Bill of Particulars in N. Y. Suit A Mass of Vagaries; Majors in a Spot The long awaited bill of particu- lars by the U. S. Government was filed Thursday (27) in the Federal Court in N. Y,' by Paul Williams, special assistant attorney general who is handling the prosecution of the case against the major companies. Williams arrived Wednesday (25) from Washington and was forced to delay a day due to slight irregulari- ties in the bill, in that it failed in some respects to confer mwith'N. Y. State tAW. The bill is more complete than an- ticipated in the beginning, but It fails to include all the items, as previ- ously intimated by Government of- ficials. In a great number of cases the Government refused specific in- formation and demands, and stated that they did not know* thus throw- ing the burden back on the film companies. In no instance does the Govern- ment tip its hsmd, only giving such information as would be readily known to a well informed layman or film man. The failure to specify places the company defendants on a theoretical spot They now have several options. One is to demand a verified bill of particulars, which in all probability will be denied, inas- much as Judge William Bondy in granting the request for the bill March 7, allowed the Government to file all available Information Im- mediately, with the balance to come 20 days before trial. The companies can' also ask for time to answer, which also is likely to be denied, or they can enter a general denial to the charges with- out being specific. This course is none too good either, as the Govern- ment could then ask for an imme- diate trial, which is what the majors are fighting desperately to avoid. On the other hand, if they file a specific answer they will have tipped their hand as to defense to the Govern- ment. For the most part the U. S. has stated that the specific violations started somewhere between 1918 and 1930 without giving any further In- formation. The only one specific case of giving information was a list of star's names, who the Govern- ment .asserts were under contract to more than one producer «t the same time. And even here the list is in- complete. The biU Is as follows: Request No. 1 asked for a defini- tion of the phrase 'for many years last past,! and the Government states that this covers a period between 1918 and 1930 and running down to the present The next request asks the nature and terms of the agreements, and the acts and practices upon which the Government relies to prove that the defendants "have combined and con- spired to monopolize the first run metropolitan deluxe markets.' Here the Government waxes vague, 'stat- ing that it did not know when the acts commenced but believed some- where between 1918-1924 and run' ning to the present - The next request states that an integration of facilities are com- plained of, but fails to allege the basis of such illegality. Particulars are asked as to parties to the con- tracts, terms, names of agents, time and place and if still in effect Gov't Emphasizes Big Cos.' Control of Deluxers The answer of the Government is to the effect that the integration Of principal production and exhibition • facilities by Paramount, Loew's, RKO, Warner Bros., and 20lh Cen- tury-Fox is to monopolize the first run metropolitan theatres through agreements. As to the integration agreement, the U. S. cannot name the time and place and parties to the agreement but it occurred after 1918, and was partly oral and,partly written, and in effect it provided for the division of territory and exten- sion of preference to each other in the territories. Asked for details as to the charge that the defendants have executed ' innumerable ■ a^eemiehts, "cbntraicts and understandings. A definition of flrstrrun metropoli- tan theatres and their location by cities and states throughout the U.S. was the next request. Here the GQvemment lists 15C theatres in 37 leading cities. ' Asked whether or hot It was the claim that the defendants entered Into any agreement to exclude inde- pendently produced pictures from their first-run metropolitan theatres, the Government answer was that they know of no specific contract for that exclusion, but arrangements have resulted in that practice among themselves for the exhibitions of their pictures to the exclusion of the independent and foreign producer. The Government reiterates that innumerable agreements, contracts and understandings in the form of long term franchises, or shorter agreements which license exhibition of each other's pictures, result in the exclusion of other domestic and for- eign producers. The times, places arid names of persons involved in these agreements are unknown to the U.S. As to preferred run and monopoly, the U.S. defines a preferred run as giving on^ theatre a prior run, and not to a competing theatre in the area, where there are competing theatres, or where there normally should be. As far as monopoly goes, the U.S. states that it extends to high-class and all other pictures. As to whether there was an agree- ment not to enter competition in areas of other defendants by build- ing or acquiring theatres and the time the agreements were made, the reply is that the defendants have acted under agreements in not en- tering the same area for competing circuits and in division of territory. The U.S. does not know the time and place and names, but f- - .agreements were partially oral and partially written and started between 1918 and 1930. The next request of the film com- panies, asking that the Ckivernment specify the 'innumerable instances' in which independent exhibitors wefe forced to sell or dispose of theatres to the majors by coercive methods, the Government states will be given separately, and at'another time to the defendants. A hearing win be held on May 5 before Judge Bondy, at which time a revoking of the order requiring an answer will be sought The Government states that if It is forced to give the names of its A.-ltnesses now, and not during the trial, there is a possibility that sev- eral of the defendants, by reason of L' eir business relations with the wit- nesses, may discourage them from testifying at thp trial. Or they may encourage the witnesses to testt^ reluctantly and unwillingly on be- half of the Government by favor- ing them in their business relation- ships. U. S. Withholds Names, Fearing Intimidation* The Government states that the power of the court to punish for contempt on any interference wiQ not afford sufficient security, and attorney Williams cites remarks made in a similar action ',.y Austin Keough of Paramount in which Paramount denied product to an in' dependent after testimony against the company. Reprisals and retalia' tions on the part of the defendants arw feared. Willia.ns goes on to say that the retaliations can be con- ducted so subtly that t^ Govern' ment will be faced with the im possible task of policing the entire country before trL.I '.o watch for possible reprisals. Asked to identify the instances where two or mo--: producer-eX' hibitors have theatres and con' veniently divide up the pictures bC' tween them, the U.S. answer is in the 'metropolitan area,' and where distributors operate theatres in the same area they 'split' the product Example — Convenient division of pictures Is usually arranged, with names, time and places unknown, but started some time sine- 1918, and all defendant affiliates and subsidi- aries have participatt d in agreements that they would not compete with each other for product, but would apportion the pictures, A definition of 'high-grade quality films' Is given as containing factors likely to attract a large pabronage : i'the higheist prices in'the area, arid a monopoly of these has existed since 1918. The defendants' next request was to name those companies participat- ing in these practices. - The U. S. says that all have engaged except United Artists. A partial list of stars under con- tract to more than one producer- exhibitor at the same time includes Wallace Beery, Metro and 20th; Gloria Blondell, Columbia and War- ners; Claudette Colbert, Warners and Paramount; Melvyn Douglas, Colum- ,' bia and Metro; Irene Dunne, Colum- I bia, Paramount, RKO and Universal; Cary Grant, Columbia and RKO; Jean Hersholt, Metro and 20th; E. E. Horton, Universal and 20th; Boris Karloff, Universal and WB; Edmund Lowe, 20th and. Universal; Herbert Marshall, Paramount anc^ RKO;' Wil- liam Powell, Metro and WB; Gene Raymond, RKO and Warners; Ed- ward G. Robinson, Columbia and Warners; Fred Stone, Paramount and RKO; and Gloria Stuart 20tb and Universal. All of these double con- tracts occurred since July 1, 1934. Loans of Personnel, And 'Coercive Selling* It is also stated that the acts of the distributors in not permitting per- sonnel to be made available to inde- pendents was pursuant to agree- ment In this regard it is alleged by the U. S. that all the majors except United Artists have had understand- ings, but they do n;3t know if they are'oral or written, or tHe time, place or names of those entering the agree- ments to prevent the independents from placing personnel under con- tract 'In recent years' means since 1925 as to loans of personilel to each other. Loans were pursuant to agreements, but what kind, when or where the U. S. does not know. Next, 'coercive selling' is defined as compelling the purchase of films by threatening to build competitive the- atres, to deprive' independents of product, purchasing of theatre sites in the neighborhood with suggestions that the defendants intend to build, threats to purchase an equity in in- dependent theatres, and threatening to impose on independents unreason- able clearance. All eight of the majors are en- gaged In 'one or more harsh, onerous and .unfair trade practices' (block booking, etc.), started some time since 1918, and all have acted pur- suant to agreements between dis- tributors. The names, places and time is unknown, but some time since 1918. Also the Goveriunent does not know if the agreements were oral or writtei), but agreements were to the effect that as a general rule they apply the practice to un- affiliated theatres. They also have applied the practice generally wheth- er the unaffiliated theatre is in com- petition with an affiliated one or not The eight majors have extended the benefits to the five in the exhibi- tion field (Paramount, Loew's, RI^O, Warners, and Fox). An example Is sharing advertising costs, optional contracts, contract modifications, overage and underage, cancellation of shorts and move- overs, and these benefits extend un- der contracts, but the times, places and names are imknown, except that they started since 1918. The Govern- ment does not know if the agree- ments are -written or oral, but the benefits are extended whether the theatres are affiliated or not; but, however, most theatres are in com- petition. The metropolitan deluxe theatres are listed as Paramount 25; Loew's, 21; RKO, 25; Warners, 26; and Fox, 25. The U. S. says further that there has been a gradual decrease in the number of feature films since 1916, but the Government does not know whether this is pursuant to an agree- ment or not The decrease has been due to, and has aided the monopoly, because the affiliated theatres ex- hibit the larger proportion of the en- tire output as first-run productions in first-run houses. The bill of particulars was signed by John T. Cahill, U. S. Attorney- General; Thurman Arnold, assistant attorney-general; and Paul Williams, Robert L. Wright John F. Clogett, J. Stephen Doyle, Jr., Shelby Fitze, special assistant attorneys-general, and Seymour Krieger and Seymour Simon, special attorneys. It covered 33 pages. complaint and bill of particulars. Hearing on this application will be May 5. American Telephone & Telegraph, Western Electric and Electrical Re- search Products, Inc., also on May 5, will ask the court to dismiss that portion of the complaint, filed by Jablow and Acker, as applies against them. The portion of the complaint In- volving the telephone company claims hugh and excessive sums paid for licensing agreements, and a loss of $400,000 through Vtyt appointment of John E. Otterson, ERPI president, \ as the Paramount president THEATRE BLDG. ALL OVER mm More Suits Par Files Its Answer To Stockholder Suit Paramount filed answer in N. Y. federal court Wednesday (26) to the $25,000,000 stockholder action brought against it by Frank Jablow "and Sam AckSr.""^ ~"' ' Par first requests dismissal of the complaint on grounds of failure on jthe.part of the plaintiff to comply with the rules of Civil Procedure, which states that each cause of ac- tion In a complaint must be in sepa- rate counts. Paramount states that if this is de- hied it will ask that the plaintiff serve the company with an amended (Continued from page 3) monopoly which is now charged to exist Such control would be equally disastrous to independent theatre owners. Local monopoly control may be quite as effective ia stifling competition as national mo- nopoly control and at the same time be more disorderly. It would also put the producers who had divested themselves of their theatres, at the mercy of the local monopoly.' The film industry contains many 'defensive combinations against ag- gressive tactics of others* which run counter to the anti-trust laws, Prof. Arnold said, while many other chains are equally subject to attack. In fairness to the Griffith enter- prises, he remarked that other ac- tions are contemplated. One of the objects of the Okla- homa action attracted considerable attention. The request for injunC'^ tion against pooling and collective purchasing. Recalling the NRA code days, Myers said the D. J. has adopted Allied's claim that exhibs should be assured 'the right to buy.' This phase of the action looked like veiled Administration support for the Neely bill, although the anti- trust division ordinarily is not dis- posed to back up particular pieces of legislation. The broadness of the bill of com- plaint showed positively the D. J. has been digging intensively into various regional situations that have been called to its attention. Many other sectional chains are subject to the same sort of attack, with disso- lution to be asked in nearly every instance. Despite the refusal to discuss the next moves, the D. J. in the past has indicated actions of this kind may be anticipated in practically every major territory. Sleuths have been particularly Interested in New York, Philadelphia, Chicago, Southern California, Michigan, and New Eng- land. Canton, O., May 2. A new theatre, the Fayette, opened at Celina, O, by Fred Schmitt and his son Robert Site of the new house formerly a.business location. Chris Velas, Wheeling, W. Va., has plans for a new 800-seater at Woods- dale, Wheeling suburb. Velas, an Ohio and West Virginia exhibitor, expects to have the new house ready for opening in September. Construction has been started on a new 1,000-seat house by A, C. Schwartz, and J, H. Shulman, at PainesviUe. Will be ready for open- ing late in the summer. BUxall's New Houses 'Palouse, Wash., May 2. C. A. Blaxall, owner of the Con- gress theatre and hotel,, will open the Family theatres at Garfield and Oakesdale May I, He recently pur- chased these theatres and closed them for remodeling. John Lee, operator of theatres in Soap Lake and Qulncy, has nearly finished construction of a new house at Ephrata, near Coulee Dam. F«x-W. C.'s NeKTCst Sacramento, May 2. A. M. Bowles, northern California division manager for Fox-West Coast, announces that a new 800- seater wiU be built in San Carlos. W. H. Lollier, in charge of the Fox- West Coast real estate department, will supervise construction of the new -house. More Seafa for Calif. Los Angeles, May 2. Intercoast Amusements, Ltd., breaks ground next month for a new 946- seater In Merced, to be known as the Gateway, and slated to open Sept 10. Same company Is building another house In Santa Rosa. Wise's New Theatres Wisconsin Rapids, Wis., May 2. Frank Eckhardt opened the new Wisconsin here last week, 800-seater. At Tomahawk, Howard W. Ro- barge plans a new 500-seater. A. E. Kuehn and Dr. J. J. Hau- brick building 500-seater at Osh- kosh. C. L. Roser opened the 400-seat Jullar at Baraboo Thursday (27). Welcomes Suits (Continued trom page 3) (1), Mangum .(3), Oklahoma City (1), El Reno (3), Ponca City (3), Scapula (2), Sayre (2), Vinita (2), Dewoka (3). Texas—Cleburne (2), Goldsmith (1), Lubbock (3), Midland (3), Sun- ray (1). Partnerships, Etc. In partnership arrangements—Ard- more, Okla. (6), Bristow, Okla. (2), Fairfax, Okla. (1), Gainesville, Tex. (4), and Miami, Okla (2). Westex Theatres, Inc., has the fol- lowing locations and number of-the- atres: New Mexico—Portales (2). Texas—Ballinger (2), Belton (2), Brady (2), Burkburnett (2), Clarks- viUe (3), Georgetown (2), Gonzales (1), Hereford (1), Lampasas (2), Lockhart (1), Luling (1), Merkel (1), Odessa (2), Plainview (3), San- saba (1), Spur (2), Stamford (2), Winters (2). R. E. Griffith Theatres, Inc.; has the following locations and number of theatres: New Mexico —Alamogof do (2), Carlsbad (2), Clovis (3), Conchas Dam (1), Deming (1), Eunice (1), Gallup (2), Hobbs (2), Jal (1), Lov- ington (1), Rockwell (2). Texas—Olney (3), Post (1), Alvln (1), Bay City (2), El Camp (2), Texas City (2), Victoria (2), 'Whar- ton (1), Arizona—Ajo (1), Benson (1), Bowie (1), CooUdge (1), Duncan (1), .<;)uppr.ence JD.,. Hayden (1). TWcNary (15, Pima (1), Ray (1), Saf- ford (2), Springerville (1), Sonora (1), St Johns (1), Superior (1). Willcox (1). Totals of towns and theatres ope- rated by Griffith and its affiUated companies named defendants in the Government suit show 22 towns and 57 theatres for Griffth Amusement Co.; 27 towns and 69 houses for (Con- solidated Theatres, Inc.; 19 towns and Sonthwest's BIdg. Dallas, May 2. New southwestern theatre build- ing includes C!ampus at Lubbock, 850 seats, due to start in two weeks; Franklin, Bay City, 750 seats; Camp- us, Stillwater, Okla., 440; Superba at Denlson, to be completely re- modeled and balcony added, upping seating capacity by 120. New AtlanU Nabe Atlanta, May 2. Evlns Amusement Co. last wet^k leased ground for new 1,000-seat the- atre in Briarclifl Plaza, new com- munity realty development. Theatre will occupy central spot in project which will cover an entire block. John G. Evlns, co-owner and mgr. of Tenth St (nabe) is prez of amuse- ment firm. G. Tom Bailey,' operator of chain of colored houses here, has com- pleted remodeling of his Lenox the- atre, Including doubling of seating capacity to 500. Reading's Ist Auto Cinema Reading, Pa., May 2. First outdoor theatre here, to be in operation every Monday and Fri- day night during -the season, opened tonight Operators have leased large parking field at Reading Fair prop- erty, one mile north of city limits. Twenty-five cents admits automobile with not more than five persons; others must pay five and 10c each. EsthervUle's (la.) Boom Mason City, la.. May 2. Construction of a new theatre at Esthervllle, la., is planned there, by Central' States, the second being buUt ln-Esther.viUe.-Two. days.j)xe.-.._. vious, Harold Aldinger of Primghar and C. J. Furstow of Sioux Falls, S. D., signed a 10-year lease on a theatre there. 34 theatres for Wextex; and 36 towns and 49 theatres for R. E. Griffith Theatres, Inc, or a total of 104 towns in which these four companies have 209 theatres.