Boxoffice (Oct-Dec 1963)

SAYS RECENT COURT DECISION UPHOLDS CLEARANCE CONCEPT TOA's Stuart Aarons Hails Boston Opinion As Boon To Distribution NEW YORK — A recent decision of the U.S. Court of Appeals in Boston should encourage distributors to stand fast by their traditional concepts of run and clearance, in the opinion of Stuart H. Aarons, chairman of Theatre Owners of America’s legal advisory committee. The case involved an antitrust suit brought by E. M. Loew Theatre Circuit, which sought a 21-day clearance after first-rim Boston for its Winchester Theatre, Winchester, Mass. Under the prevailing system, Malden, Mass., had a 21-day clearance after Boston and a seven-day clearance thereafter over Winchester. The litigation covered the period of 1954 to 1958. LOEW’S REQUEST REFUSED In 1955, E. M. Loew requested, in behalf of his Winchester Theatre, the same availability as that of Malden. The distributors refused and kept him seven days after Malden. Loew then brought his action under the antitrust laws, claiming a conspiracy on the part of the distributors to deny him a first neighborhood run; that is, a run 21 days after first-run Boston. The case proceeded to trial before a jury and, at the close of the plaintiff’s case, the court directed a verdict for the defendants. The ruling was affirmed by the Court of Appeals. Commenting on the decision, Aarons asserted that “coming at a time when some are attacking the traditional concepts of distribution, this decision reaffirms and reasserts fundamental truths to give courage to those who do not believe in scuttling the system of runs and clearances which made this industry great.” Aarons pointed out that even though there was parallel or uniform action by all of the distributor defendants in holding Winchester seven days behind Malden, the court rules that this uniformity was not enough evidence of conspiracy to justify sending the case to the jury. UNIFORMITY IS EXPLAINED In so holding, the court said: “It is now widely held that the employment by distributors of a system of runs and clearances does not, per se, violate the act ... we have never recognized conscious parallelism, standing alone, as sufficient to sustain such a finding.” Aarons said that this language was of “considerable moment” when it was recalled that the Statutory Court in the Paramount case made a finding that the defendants had maintained illegal systems of clearances. He said the court also had taken a realistic view of the quest for uniformity by all exhibitors and the fact that uniformity in runs and clearances resulted not from conspiracy, but rather from lawful competitive pressures. He quoted the court: “Nothing is clearer than that E. M. Loew himself wanted, and expected, all de ll ATC Given Court Okay To Close Calif. Merger Baltimore — Judge Ruben Oppenheimer in Baltimore City Court ruled that United Artists Theatre Circuit could officially conclude its proposed consolidation with United California Theatres, a move which had been opposed by a group of UATC stockholders known as the Committee for the Better Management of United Artists Theatre Circuit. UATC now will go ahead with the transfer of the stock and report its conclusion at the regular meeting of stockholders on a date to be set. The approval of the deal by the court virtually will dissolve the dissident stockholders committee which had sought to remove the present management and replace all but one director on the board with its selections. The special meeting of the stockholders, as requested by the committee, also will not be required, as a result of the court’s decision. fendants to treat him alike; he merely wished the treatment to be better.” The court then added that when an exhibitor got favored treatment from one distributor, “it would almost necessarily receive identical treatment from the rest simply as a result of lawful competitive pressures.” Quoting the court further: “E. M. Loew, in requesting defendants to advance it out of the last-run group, knowing that all must respond equally, is asking for the very type of conduct which E. M. Loew presently condemns . . . and which would automatically expose defendants to suits by all those remaining in the run (i.e., the contiguous towns over which Malden also took the same seven days clearance as it did over E. M. Loew’s Winchester) . Accordingly, on E. M. Loew’s hypothesis, it would seem that defendants’ only safe recourse would be to promote all Indians alike to chiefs, and hence jettison the entire system of suburban, and indeed of metropolitan, runs and clearances. We are not prepared, simply on Loew’s speculation that abandoning the system would be economically advantageous to the defendants, to put on trial the entire wisdom of their belief that runs and clearances produce the maximum of overall revenue.” Aarons noted that the court adverted to E. M. Loew’s principal argument that a conspiracy could be inferred from the fact that the distributors’ conduct was against their apparent best interests. In dismissing this contention, the court said that “the defendants denied that it was to their economic disadvantage to prefer Malden over Winchester, and all that E. M. Loew can affirmatively point to is that their business judgment in giving three competing driveins (one of which, singularly enough, was E. M. Loew’s) a run and clearance equal to that at the Malden conventional theatre may have been debatable. We do think even this is a fair statement so far as the summer months were concerned. How defendants may have responded to the problems of drive-ins in winter, an obviously special situation, is no ground for finding that they were acting against their apparent best interests in preferring Malden’s conventional theatres over Winchester.” Aarons said this case was the latest in a series of decisions where courts in motion picture antitrust cases had thrown out the case without permitting it to go to the jury. He noted that similar rulings were rendered in the Viking case in Philadelphia and the Campopiana case, also in Massachusetts. It would appear, he said, that the “terror and coercion of civil antitrust cases in the motion picture industry should by now be dissipated,” and that “distributors should take heart from this decision.” He said they should not be coerced by antitrust suits to “erode the firm structure upon which this industry was built” and that “they should not be short-sighted by an apparent momentary or temporary gain, which ultimately destroy important segments of the theatre industry.” In conclusion, Aarons said it was high time that discipline and order be recreated in distribution and that “this decision points the way to that end.” Stuart Aarons Heads TOA Legal Advisory Group NEW YORK — Appointment of Stuart H. Aarons as chairman of Theatre Owners of America’s legal advisory committee was announced by John H. Rowley, TOA president. Aarons is house counsel of Stanley Warner Corp., whose general counsel is David Fogelson, senior partner of Schwartz & Frohlich. He is a Phi Beta Kappa graduate of City College of New York and the Harvard Law School. Shortly after graduation in 1932, he joined the legal staff of Warner Bros. Pictures. During World War H, Aarons received the Bronze Star for his work in organizing Filipino guerillas into units of the regular Army of the Philippines, attached to the United States 8th Army. Aarons will continue the Industry Case Digests, a TOA service initiated by Herman M. Levy, recently resigned as general counsel of TOA. Aarons’ first analysis of an industry case is in this issue of Boxoffice. U, Decca Set Dividends NEW YORK — A regular dividend of 30 cents per share on the capital stock of Decca Records was declared Tuesday (3) by the board of directors, payable December 30 to stockholders of record on December 16. At the same time, the board of directors of Universal Pictures declared a quarterly dividend of 25 cents per share and an extra dividend of 25 cents per share on the common stock, payable December 27 to stockholders of record December 17. 4 BOXOFFICE :: December 9, 1963