Boxoffice (Apr-Jun 1947)

ORDER STAYING MAJOR PART OF DECREE IS ANTICIPATED Confused Situation Seen Until the Supreme Court Hands Down Decision WASHINGTON — An order staying the major portion of the antitrust decree — drafted by the defendants in the suit — was presented to Supreme Court Justice Reed late in the week, and it is anticipated that he will sign the order some time next week with few if any changes. The delay came as the result of the illness of Robert L. Wright, special assistant attorney general who has been representing the government in the suit. In accordance with a suggestion made by Justice Reed in a letter following the hearing in his chambers on March 28, all lawyers for the major defendants, excepting 20th Century-Fox, drew up a form of order and presented it to the court on Thursday. DELAYED THROUGH ILLNESS A copy also went to Wright’s office but as he was down with the grippe, Justice Reed delayed the signing. The actual signature is expected to be a formality with few, if any, changes anticipated in the order as drawn. With the stay virtually assured a roundup of opinion among major company lawyers and sales executives indicates that the confused selling situation in the industry will continue pretty much the same as it is now — confused —until the supreme court hands down its decision on the varied appeals several months or a year hence. Companies which have been experimenting with competitive bidding will continue to experiment. Those which are opposed to it can — and will — drop it until the high court decision. Arbitration will be continued under the present rules. Since the company lawyers appeared before Justice Reed Friday, March 28, and were told to agree on some form of injunctive order for him to sign there have been many hours of argument among the lawyers. Paragraph 9, Section II, which was to have gone into effect April 1, will be one of the provisions suspended. This is the paragraph which permits an exhibitor to write to a home office and ask for a particular run. The distributor was prevented from arbitrarily refusing to grant such a run. Its purpose was to enable an exhibitor to bid on any run he wanted. CAN’T DEMAND BIDDING Exhibitors seeking bids on higher runs than they have been getting can still seek them, but there will be no requirement that a distributor shall grant their requests. Most of the decree will be in abeyance, but the stay will be permissive, not mandatory. Those who want to carry out the terms of the decree as they are now written will be able to do it. Those who battled for the supremecourt injunction will be able to observe it. But they may do a lot of pondering before deciding to take full advantage of the stay granted by the supreme court. Charles D. Prutzman, counsel for Universal-International, points out that the three judges found a number of things to be illegal and these things will continue to be illegal until upset by a higher court, in this case When the Court's Here is what is suspended: the supreme court. He says it would be foolhardy to ignore these findings. For this reason, Prutzman is advising Universal against price-fixing, franchise deals, conditional selling, formula and master agreements, all of which were found to be violations of the antitrust law. Justice Reed’s stay if signed as presented stops enforcement of the decree on all of these things, except franchise deals, upon which no stay was sought. The Universal attorney makes a distinction between the decision and the decree. He says that he is advising the company to avoid trade practices called illegal in the decision. At the same time he is advising Universal against selling its product in accordance with the decree, pending final decision of the supreme court. He referred specifically to competitive bidding, which will be enjoined. Universal’s franchise deals had run their course by the time the ban was scheduled to go into effect April 1 and no new ones have been made since the decree was handed down. The company has tried bidding in only four situations. Herman Levy, general counsel for the MPTOA, had this to say about the situation: “The result is gratifying, and is at least a temporary reward for those exhibitor associations which have since last June been Stay Is Granted aggressively and affirmatively fighting against those aspects of the equity decision and of the final decree which might well lead to chaos in the industry. “Neither the final decree, these stays, nor a reversal by the supreme court will necessarily make illegal competitive bidding and the other dangerous aspects of the equity decree. Nevertheless, it should be comforting to the entire industry and especially to exhibitors to know that for some time to come at least these objectionable aspects of the decree will not be a matter of compulsion and of discrimination.” Abram F. Myers, Allied general counsel, refused to make any comment pending further study. How much bidding will be continued, and where, seems to be a topic for further discussion. Loew’s, Inc., RKO, 20th-Fox and Paramount have been the companies most active in its use. Loew’s has tested the method in about 50 situations, RKO is understood to have used it in 200, 20th-Fox tests have been widely scattered, and Paramount has not given out any figures as to how many spots in which the system has been used. William F. Rodgers, vice-president in charge of MGM distribution, said late in the week that his future course would be de • The ban on price-fixing. • The ban on maintaining clearances by agreement. • The ban on granting clearances between theatres not in substantial competition. • The requirement that the burden of proof as to the reasonableness of clearance shall be on the distributor wherever an attack is made on a specific clearance. • The ban on formula deals or master agreements with circuits in which prices are figured on a percentage of a picture's national gross. • The ban on conditioning the sale of one feature upon the sale of another. • The ban on favoring old customers and all the requirements for competitive bidding, and the requirement for 95 per cent theatre ownership. • The ban on arbitrarily refusing a run after an exhibitor has made a request by registered mail to a home office. • The section which would have ended all the provisions contained in the consent decree covering arbitration. Its effect is to leave arbitration under the present rules. What remains in effect: • The ban on franchise deals. • The prohibition against theatre pools. (Practically all of these have already been dissolved.) • Prohibition against expansion of circuits, except with court approval. • The ban on operation of picture-buying combines by distributorowned circuits. • The section requiring 95 per cent ownership if a distributor-owned circuit is to continue with complete freedom of booking as in the past. • The section permitting the Department of Justice to require reports from defendants for the purpose of enforcing the decree. 8 BOXOFFICE :: April 5, 1947