Boxoffice (Jul-Sep 1948)

Suit Sfarts 'Ball Rolling Against Circuits and Combines NEW YORK— The SIMPP antitrust suit against the Cooperative Theatres of Miohigan and United Detroit Theatres will start the legal ball rolling against large circuits and booking combines in “tight situations,” industry lawyers predict. Their predictions are based on statements made by SIMPP members during the past few days and on inside dope of contemplated antitrust cases that will probably be filed as a result of the Detroit action. SIMPP has been investigating “tight situations” throughout the country, according to Robert J. Rubin, SIMPP attorney. The Detroit action is only the first, but not the last action to be brought by indep)endent producers against theatre chains “which have been throttling competition with their illegal stranglehold on the picture market,” said Samuel Goldwyn, a member of SIMPP. Goldwyn’s remarks were contained in a joint statement issued with Walt Disney, another SIMPP member, August 26, two days after the suit was filed. They linked the outcome of this action with that of the Paramount antitrust case which will be resumed by the New York statutory court October 13'. They mentioned that SIMPP has given the government all the help it could in the case against the major companies. (SIMPP first Detroit Antitrust Suit (Continued from page 8) reference to the basic “Paramount or Equity” case in the New York courts has a special position. Basically, the plaintiffs claim that its members are harmed to the extent that the screens of American theatres are subject to “illegal and restrictive combinations,” resulting in curtailment of the market for their product. According to Gimther R. Lessing, chairman of SIMPP’s executive committee, the suit is filed as a major step in a program to restore competition between theatres, and so enable the public to get a better choice of films, and the independent producers to get their rightful share of returns from the domestic market. Essential background of the Detroit situation, as summarized by the plaintiffs is that the two plaintiffs control 90 per cent of boxoffice receipts in the Detroit area other than first run, and UDT itself controls 65 per cent of first run boxoffice receipts. Another fundamental attack is on the much-discussed dual bill day-and-date programming for the hierarchy of runs from second on down. It is alleged that other theatres, nonmembers of the defendant groups, are compelled to conform to the same dual bill pattern. Accordingly, it is contended, in the 62 most important neighborhood theatres in the Detroit area, the theatre going public is afforded only a choice of four programs. In answer to this point, Earl Hudson issued a statement that “it is sound business to make all pictures available and schedule the same double features at the same time as a matter of public convenience. Under any other system, it would be necessary for tried to intervene in the case and when the New York court denied permission to intervene, it filed a brief as friend of the court. It argued for divorcement and against competitive bidding). Goldwyn and Disney also referred to reports of a consent decree settlement for the Paramount case and expressed the hope that the government would not agree to any compromise in this “fight against screen monopoly.” They promised that there will be no compromise in the suit against Cooperative Theatres and United Detroit. Lawyers here predict that it will take four or five years to settle this case, judging by past court performances in other important antitrust actions. Meantime other independents and small exhibitors will probably file actions of their own against large circuits and combines. One such case is now under discussion in New York. The prospective plaintiff is a medium sized independent exhibitor. His legal targets would be several of the larger circuits. If SIMPP should win its case, that would mark the end of booking combines, lawyers agree. Some legal experts and exhibitor leaders, who refused to be quoted, feel that SIMPP has done the industry an injustice in filing the action regardless of the merits of the case. theatregoers to cross the entire city to see a particular show.” In turning its attention to Cooperative, the complaint recites a history, recorded in these columns over several years, going back to 1930. It is contended that the organization does not admit a new member to its benefits if his admissions is opposed by any competitor who is a member— a situation generally similar to that in the Associated Press case which made history about two years back. Distributors representing the plaintiffs tried to meet the concentration of buying power in Cooperative by dealing with nonmember houses, but, it is claimed, this resulted in Cooperative’s admitting some competing theatres by splitting product between houses. Then; “The allocation of product to the various theatres is dictated to the distributors by Cooperative, and such distributors have no alternative except to comply therewith. By this means competition was eliminated, first between former nonmembers and the members of Cooperative, and, second upon such former nonmembers being admitted, between competing member theatres.” It is charged that opposition by even one member has always resulted in rejection of an applicant for membership in Cooperative, and that the organization restricts the resignations of its members in order to maintain control over film exhibition, and will not permit resignation as long as any contracts remain outstanding. With regard to first runs, it is charged that no other theatre within 65 miles may play the same feature as a first run, during its engagement. According to Lessing, Detroiters who wanted to escape this restriction must drive this distance, or to Windsor, across the international line. It is further charged that UDT insists upon a right of first refusal for product of Loew’s, They predicted that the suit will add to the confusion and chaos already plaguing the industry. They said that it will further damage the. industry’s already damaged reputation. The way things are today, the industry cannot afford additional antitrust suits. The SIMPP brief mentioned the existence of more than 60 now before the courts. Critics of the SIMPP move said that this case may eventually interfere with production, because neither exhibitors nor producers will feel free to make any move without becoming involved in court actions. Abram F. Myers, general counsel for Allied States Ass’n, said the suit did not affect his member organizations. Allied is in no way connected with Cooperative Theatres of Michigan. At one time no member of an exhibitor organization could belong to the Cooperative, he said. When that rule was in effect several Allied members resigned when they joined the Cooperative. That rule since has been v/ithdrawn. He also mentioned that he, as Allied general counsel, does not represent any booking or buying combine. There are cases where Allied members are associated in such combines, but such combination is in the line of exhibition business and not as a trade association activity, he pointed out. Warner, RKO Radio, Paramount, and United Artists. Pointing out that some of the plaintiffs distribute through RKO and United Artists, it is charged that distributors of independent product are prohibited from dealing with the Fox Theatre, largest house in town, operated as a first run by a 20th-Fox subsidiary according to the plaintiffs — unless UDT gives specific consent. Any attempts to license pictures outside of “UDT’s first run monopoly” have been met, it is said, by reprisals in the form of less advantageous terms, bookings, and playing time in subsequent runs of such pictures — thereby effectively maintaining the first rim position. It is the contention of the plaintiffs that this alleged conspiracy has resulted in forcing down the price paid for their pictures and the allocation of less favorable playing time for them, since UDT and Cooperative are charged with agreeing beforehand upon prices and conditions, and agreeing not to compete against each other to raise the price. It is said that the two groups insist upon concluding a deal on a particular picture with both before either will date the picture— thereby placing the distributor in a disadvantageous position with that exhibitor group which has yet contracted for the film. This further results, it is said, in lengthening the actual time between first and second runs, and decreasing the value of the film accordingly. Another highly important charge is that the groups have combined to prevent distributors from getting percentage agreements wdth both United and Cooperative for the same picture. An interesting sideline is contributed by the charge that, if one of the groups does not want to buy a particular film, which is one of a pair set for dual billing, the other group will not date the other film until a satisfactory substitute has been bought by the first group to complete its day and date billing. 10 BOXOFFICE : ; August 28, 1948