Boxoffice (Oct-Dec 1940)

THE DECREE: WHAT IT FORBIDS AND PERMITS AS ANALYZED BY MYERS FOR ALLIED MEMBERS When a suit is tried and the court renders a decision, the order which the court enters is called a decree or a judgment. Since the purpose of such order is to carry out its decision, the court has control over its provisions, and, in case the parties do not agree thereon, the court may itself write the decree. That is a contested decree. When siu h a decree is entered in a case brought by the government under the anti-trust law, it may be used as evidence of combination or conspiracy in cases brought by private parties under the anti-trust law to recover treble damages. A consent decree is one agreed to by the plaintiff and the defendant in a suit and is entered by consent of the parties, usually before trial. Since it is not contested, the court’s discretion is brought into play to only a limited extent and the court really has no control over the specific provisions of a consent decree. Of course, if the proposed decree is beyond the power of the court to enter, or if its jirovisions are manifestly unfair or inequitable, or if it comes to the attention of the court that the decree is the product of a corrupt agreement and is likely to become a public scandal, then the court may refuse to enter it. But the court can not write provisions into or strike provisions from the decree merely to suit itself or to accommodate third parties. A consent decree, entered before any evidence is taken, can not be used as evidence in private suits. A consent decree, once entered, is fully as binding as a contested decree, if not more so, since the parties are prevented by their consent from later attacking it. It is fair to say that a consent decree can only be set aside or modified to the extent that provision is made therefor in the decree itself. A consent decree contains no findings of fact and no adjudication of guilt, but violation of its provisions constitutes contempt of court and is punishable as such. The proposed consent decree has been accepted by only five of the Big Eight, namely Paramount. Loew’s (M-G-M). KKO. Warner Bros! and 20th Century-Fox. The decree does not affect any other distributor. Whenever the word “distributors” is used herein it refers to the five consenting defendants and to no others. Trade Showings and Groups of Five ^ With respect to features released after August 31. 1941 no clistrihutor shall license any feature picture for public exhibition until such feature has been trade shown within the ex change di.strict in which the public exhibition is to be held. Notice of ever.v trade showing must be pub lished in advance in a trade publication having general circulation among exhibitors in the dis trict. .Such notice must give the title of the picture and the date, time and place of such trade showing. The purpose of this provision is to enable exhibitors to learn about the pictures offered by the distributors before buying them. This does not mean that an exhibitor must attend the trade showings in order to buy the pictures. It merely means that the trade showings must be advertised and held so that he may attend them if so minded. Features undoubtedly will be reviewed by the trade press at the time of or immediately following the trade showings. The new practice will increase the opportunities of reliable trade jiapers to serve the exhibitors by prompt, accurate and disinterested reviews. Exhibitors will need to patronize and support those publications which in the past have proved themseUes trustw'orthy. 2— Also beginning with the 1941-1942 season, no distriljutor may offer more than five i)ictures in a single group. However, a distributor may offer as many such groups at one time as it sees fit, but it may not require an exhibitor to take an unwanted group of features in order to buy the group he wants. In other words, an exhibitor may buy from a distributor as many groups of five as the distributor may offer at any one time, but he can not be forced to take one group in order to buy another. How many groui>s of five each distributor will have ready to offer at the beginning of file season. or at any other time, is a matter of speculation. It is reasonable to suppose that each distributor will have as many pictures completed and trade shown at one time as available capital will permit. It is not reasonable to assume that these great companies will allow any legitimate demand for films to go unmet. Assuming that each of the five consenting de Result an Attempt to Reduce Legal Draft To Lay Language Washington — Abram F. Myers, general counsel of Allied, is author of “A Simple Explanation of the Consent Decree.” It is, however, a lengthy document the foreword of which declares: ‘‘Recognizing that the legal language used in the decree may be confusing to some exhibitors, the general counsel of Allied has prepared this simple explanation of its provisions — of what it forbids and what it permits.” In connection with it, Myers also predicts debate over the document “will continue and exhibitors who have not already done so will be making up their minds whether it is a good thing or a bad thing.” However that may be, Boxoffice in this issue, publishes the first instalment of the Myers’ analysis. Others will follow in succeeding issues. fendant.s will have four groups ready to offer at the beginning of the next season, they together will offer the exhibitors a total of 20 groups or 100 pictures to choose from. A distributor in offering its features for license may chatige the combinations of features in groups as it may from time to time determine. This means that, if an exhibitor does not like all the pictures in a particular group, he may bargain with the distributor to substitute therefor more desirable pictures from another group. It could mean that a distributor, wishing to punish an exhibitor for not buying an earlier group, could pack the desired group with several stale or unwanted pictures. The best assurance the exhibitors have that such tactics will not be used is the fact that the department of justice will continue to keep a watchful eye on the situation. The objections to this method of selling are (a) that, while it enables exhibitors to choose as between groups of five, distributors still can force unwanted pictures with desirable ones; (b) that it dei)rives exhibitors of their present cancellation privileges, such as they are; (c) that it threatens the continuous flow of product that exhibitors lely on in the operation of their theatres; and (d) that it will impose a hardship on exhibitors in having to buy at frequent intervals and may increase prices. Those who favor the new method claim that the exhibitors will benefit because (a) where as he now has to buy from each distributor from 36 to 52 pictures sight unseen he then will be able to choose as between groups of five concerning which he can obtain all the information he wishes; (b) the requirement that pictures must be trade shown before being offered will place them in the class of perishalde commodities and the distributors will be under compulsion to sell them as soon as possible, thus adding to the exhibitors’ bargaining power; (c) buying will not all he done in the flush days of the autumn when there is a high price psychology and some buying can be done between Thanksgiving and Christmas. during Lent, and in the hot days of the summer when exhibitors and distributors alike are singing the blues; (d) the stranglehold of the distributors on the screens will be broken, giving the exhibitors greater freedom in shopping around and opening the way for independent producers to enter the market and compete with the Big Eight. Forcing Features, Shorts and Foreigns As pointed out under the preceding head, the license or offer for license of one group of features shall not be conditioned upon the licensing of another feature or group of features. The decree further provides (and this will be effective as soon as the decree is signed) that no distributor shall require an exhibitor to license short subjects, newsreels, trailers or serials (collectively called “shorts”), or to license reissues, foreigns or westerns (collectively called “foreigns”) as a condition of licensing desired groups of feature pictures. “Westerns” are defined as “those western pictures which are not of the usual character and type of, and are inexpensively produced as compared with, the distributor’s general line of features. “Foreigns” are features “produced outside of the United States except such as are produced in the English language by the distributor or a subsidiary or affiliate thereof.” These provisions against forcing are clear-cut and unequivocal. The remedy for forcing is equally definite and certain. Where a contract has been entered into and the exhibitor claims that unwanted features (other than those contained in a particular group), or short subjects, or westerns, or foreigns have been forced upon him as a condition of licensing the desired features, he may arbitrate his claim provided he sends written notice to the distributor at its home office of his claim not later than two days after receipt of the distributor’s written notice of approval of his contract. The arbitrator in such a case will have power to make (1) a finding as to whether the licensing of the desired features was in fact conditioned upon the exhibitor buying the unwanted features, shorts, westerns or foreigns, and, if his finding is in the affirmative, to make (2) an award cancelling the contract for (or to the extent that it relates to) the forced products. It will l>e recognized that this is a great advance over such proposals in the past which would have required the exhibitor to give notice of his claim within a certain number of days after his application was signed and before it was finally approved, thus endangering his contract as to the desired features. Under those earlier proposals, if the home office cancelled his entire contract, as it was free to do, the exhibitor faced the probability that the exchange in negotiating a new contract would simply add the price of the unwanted product to the product licensed. But the decree does not stop here. It recognizes that an exhibitor may not want to risk obtaining relief from a contract including forced products. And so it provides that where no license has been entered into, controversies as to whether a distributor has tried to force features, shorts, westerns or foreigns may also be arbitrated. In such cases the exhibitor must give written notice to the distributor not later than five days after the alleged attempt w’as made. The arbitrator, if he finds that the offer of features was in fact conditioned upon the licensing of other features, shorts, etc., may make an award imposing a penalty of $500 on the offending distributor to be paid into the Arbitration Fund. Exhibitors may ask why they should maintain a proceeding for the imposition of a penalty that does not benefit them directly. Obviously, a favorable finding by the arbitrator will pave the way for the exhibitor to negotiate a contract for the desired product without further insistence that he accept undesired product. Moreover, the findings and penalty will insure that the exchange in question will be careful not to repeat the offense against the complaining exhibitor or any other. Alert regional exhibitor associations will be interested in the conduct of such proceedings for the benefit and protection of all their members. Selling in the Exchange District One of the provisions aimed at curbing circuit buying power is the requirement that no license for features to be exhibited in one exchange district shall include theatres located in another exchange district, and that the licensing of features for exhibition in theatres located in one exchange district shall not be conditioned upon the licensing of a feature or group of features for exhibition in theatres located in another exchange district. In other words, a distributor in negotiating with a circuit may not include as a part of a single deal pictures to be exhibited in more than one exchange district, nor can the deal as to the theatres in one district be conditioned upon the negotiation or acceptance of a deal for the theatres in another district. The obvious purpose is to decentralize buying power by requiring a circuit operating in more than one district to make separate deals as to its (Continued on page 17) 14 BOXOFFICE :: November 2. 1940