Boxoffice (Oct-Dec 1938)

INITIAL TRADE PRACTICE DRAFT INDICATES EXHIBITOR "MAGNA CHARTA" IS ON THE WAY What the First Draft Says New York — Bearing the unmistakable imprint of legal phraseology, the first draft of the proposed trade practice agreement inevitably heads for revision in some and, perhaps, in many respects. One negotiator already states the tentative agreement includes “many points for which we will not go.” In publishing the full text, Boxoffice makes it clear that what follows is not necessarily the document which will be finally signatured. Must Run Exhibitor Gamut And Win Approval of Attorney General New York — Most of the demands made by exhibitors are granted, either partially or in whole, in the first tentative 16point draft sent to exhibitor associations which participated in the trade practice negotiations, Boxoffice learns. What is seen by some as a protective measure by distributors is a clause, which in essence, states that the agreement does not become effective unless approved by the U. S. Attorney General. With the first formula finally set down in writing, it is generally agreed 90 per cent of the work now is in the hands, of attorneys. It is hoped that a final draft will be completed and approved by the end of the year. Some of the points will apply to current contracts, it is stated, but the majority will be written into pacts for 1939-40. Virtually all that remains now is for distributor lawyers and those representing exhibitor associations to get together on the exact wordage to be written into the final agreement. Just what points are to apply to current contracts have not been specified, it is stated. Arbitration Provided The final paragraph in the initial draft deals with arbitration, regarded by exhibitors as a partial victory for Allied, which not only insisted on this form of settling industry disputes but also on theatre divorcement. On the latter angle, distributors advised divorcement is a matter to be determined by the courts. The government’s civil suit, pending in the Federal court here, embraces divorcement of theatres by producers and distributors. Distributors state in the draft that they have not had time to go into details on the setting up of the boards and that this will be discussed further by all parties concerned. The future talks on this matter will embrace personnel of the boards, how they are set up in key cities and what subjects are to be handled. An Outstanding Concession Exhibitor sources see as one of the outstanding concessions the clause dealing with the right to buy and the right to sell. In a given zone where an independent has a set run, no major circuit which has had a theatre closed for more than a year may reopen the house on a prior run, even if such were the case before the theatre in question darkened. The exhibitor also has the right to buy half of any distributor’s product provided the distributor cannot sell the complete output to the competitive account. This, (Continued on page 13) I . — Cancellation Privileges If the total number of feature motion pictures offered at any one time to an exhibitor by a distributor for any run in any situation shall have been licensed by the distributor, the exhibitor, if he shall have substantially performed the license agreement, shall have the right to exclude therefrom without payment therefor not to exceed 20 per cent of the total number of feature pictures so licensed if the license fees of all thereof average not more than $100 per picture, 15 per cent of the total number of pictures so licensed if the license fees of all thereof shall average in excess of $100 per picture and not in excess of $250 per picture and 10 per cent of the total number thereof if the license fees of all thereof shall average in excess of $250 per picture provided the exhibitor shall give to the distributor written notice of the exhibitor’s election to exclude each of said motion pictures within 10 days after the mailing by the distributor of the first notice of availability thereof. If any dispute should arise as to whether or not the exhibitor has substantially performed the agreement such dispute shall be determined by arbitration. Upon the exclusion of each feature motion picture the license therefore and all rights thereunder shall terminate and shall revert to the distributor and shall be charged against the number of exclusions to which the exhibitor may be entitled whether or not a new license agreement for the exhibition thereof be subsequently entered into by such exhibitor. In determining the number of pictures that may be excluded under the foregoing percentages fractions of one-half or more shall be counted as one and fractions of less than one-half shall not be counted. If the license fee of any feature motion picture specified in the license agreement is to be computed in whole or in part upon a percentage of the gross receipts of exhibition, such license fee (for the purpose of computing the average license fee of all the motion pictures licensed) shall be determined as follows: 1. Average the license fees of all of the distributor’s feature motion pictures of the preceding motion picture season exhibited for the same run in such situation upon a percentage basis at the exhibitor’s theatre (s) . 2. If none of the distributor’s feature motion pictures were exhibited for the same run in such situation upon a percentage basis at such theatre (s) during said period then the average license fee shall be determined by agreement at the time of the making of the license agreement. For the purpose of this section “Westerns” produced in connected series or groups (connected by a common star or continued story) , “re-issues,” and features produced in any foreign country (except such as may have been produced outside of the United States in the English language by an American producer or distributor or subsidiary thereof) shall not be counted in determining the number of features offered or licensed or the number of features which may be excluded and if listed on the same license agreements as the distributor’s other feature pictures shall be listed as a separate group. For the purposes of this section only, “Westerns” (produced as aforesaid) , features produced in any foreign country (except as aforesaid) and “re-issues” shall be deemed to be separate groups of pictures and each such group shall be subject to exclusion by exhibitors on the same basis and subject to the same conditions as herein set forth. The exclusions under this section shall be exercised proportionately among the respective price brackets provided for in the license agreement, provided however, that any number of exclusions may be made out of the lowest price bracket. For example, if the license agreement shall license 48 pictures and the highest price bracket shall relate to eight pictures, the next highest price bracket relate to 12 pictures, the next highest price bracket relate to 16 pictures and the next or lowest bracket relate to the remaining 12 pictures, and if the exhibitor shall have the right to eliminate a total of ten per cent or five pictures, then not more than one picture may be eliminated from the highest bracket, not more than one picture from the next highest bracket, not more than two pictures from the next highest bracket and the remaining one picture from the lowest price bracket, or all or any part may be eliminated from the lowest price bracket. Exhibitors shall have the right in addition to the exclusion privilege provided for above, to exclude from the license agreement any picture which may be locally offensive on moral, religious or racial grounds provided the exhibitor shall give distributor written notice, within 14 days after the conclusion of the first exhibition thereof in the exchange territory out of which the exhibitor is served, of the exhibitor’s desire to exclude such picture as so offensive and specifying the grounds thereof. In the event of any dispute as to whether or not a picture is so offensive, (Continued on page 12) 4 BOXOFFICE :: December 10, 1938