Broadcasting Telecasting (Apr-Jun 1958)

GOVERNMENT JUSTICE TURNING UP BURNERS ON SEGMENTS OF TELEVISION • To confer with FCC on tv network practices April 21 • Procedures of talent agents getting closer scrutiny • Screen Gems-Columbia antitrust suit filed in New York. The Dept. of Justice has become television conscious. It is preparing to move against tv networks, if recent increased activity in its study of network program ownership and BMI ownership interests is an indication. It has stepped up its investigation of talent agencies and the acquisition of Paramount Pictures features by the Music Corp. of America. It has filed another antitrust suit against a tv film distributor. Screen Gems and its parent company, Columbia Pictures Inc. — and Universal Pictures Inc. This latest antitrust suit follows by almost exactly one year the Dept. of Justice's antitrust suit against six tv film distributors — including Screen Gems — on charges of block booking. Next Monday, April 21, Justice Dept. and FCC attorneys are meeting to discuss and consider allegations of forced tie-ins by networks in programs and music. The meeting is being held at the request of Justice Dept. officials [Closed Circuit, April 7]. At issue is the question of network ownership of programs and the potential or actual practice of a network forcing an advertiser to buy these programs as against those of independent producers. A similar potential in the use of music is considered in network ownership interests in BMI. The Justice Dept. feels, it is understood, that it may be forced to move into this area of tv network practices, even though it agreed to hold in abeyance action in other network practices purported to be monopolistic or in restraint of trade until the FCC completes its current network study hearings. One of the reasons for this attitude, according to informed sources, is that the network study staff has not yet submitted its program report. The program section was missing in the exhaustive Barrow Report, released last October. At that time the staff had recently won a court ruling giving it the right to obtain information from tv film distributors. This information is still being collected and evaluated, it is understood. The FCC staff has expressed interest in learning what the Justice Dept. has in the way of information on program practices by the networks, it was disclosed. It hopes to use some of this information in conjunction with the data it has compiled in drawing up the program report. Allied with its investigation of the localled tie-in factor involving tv networks is the Justice Dept.'s study of Music Corp. of America and other talent agencies. The Justice Dept. has received com plaints, it is known, that MCA has purportedly used its preeminent position as the leading talent agency to force networks to use some of its lesser-known clients in order to secure the services of some top-talent clients. The Justice Dept. became particularly interested in MCA when a subsidiary acquired the Paramount Pictures library of pre1948 feature films for tv distribution. MCA paid $50 million for the rights to distribute 750 Paramount Pictures features earlier this year [At Deadline, Feb. 10]. The implication is that MCA might "tiein" use of these films with use of its talent clients, or vice versa. The government's interest in MCA followed shortly after Sen. Joseph O'Mahoney (D-Wyo.) evinced an interest in the MCAParamount Pictures deal. Sen. O'Mahoney is a member of the Senate Judiciary Committee and is active in its antitrust subcommittee. He is also chairman of the Senate Judiciary subcommittee on copyright, trademarks and patents. Talent agencies represent up to 90% of the featured performers in tv. This is in addition to their representation of talent in the fields of stage, screen and night clubs. Their income from television work of their clients is estimated to run about $50 million a year [Lead Story, Oct. 21, 1957]. The two leading talent agencies are MCA and the William Morris Agency. The Justice Dept. is looking into the relations of talent agencies "one to each other," Assistant Attorney General Victor R. Hansen said last month [Government, March 3]. It will also study, the antitrust chief said, the effect these relationships have on individual actors, writers, composers. The chief trust buster also said that the Justice Dept. has been looking into the alleged control of talent by tv networks. The Justice Dept.'s complaint against Columbia Pictures Corp., its subsidiary, Screen Gems Inc., and Universal Pictures Co., was filed last week in New York district court. In the civil antitrust suit, the government alleged that the arrangement by Screen Gems to distribute Universale pre1948 features to tv stations violated not only the Sherman Act but also Sec. 7 of the Clayton Act. It charged that Columbia Pictures and Universal Pictures were competitors in the production of feature motion picture films, and that in essence, Universal had given its competitor Columbia rights to distribute its films. This violates the section of the Clayton Act which forbids the merger of two competitors, or the acquisition by one competitor of the assets of another, which would "tend to substantially lessen competition." The government claimed that Screen Gems arrangement with Universal falls in the category of one company acquiring a competitor's assets. Screen Gems' deal with Universal took place last year. The Columbia Pictures' subsidiary deal was for Universal's pre1948 library of 600 features. The Justice Dept. complaint said that Screen Gems agreed to pay Universal 721/2 % of the proceeds from television distribution until Universal received $12.5 million; 70% between that figure and $20 million, and 60% thereafter. Screen Gems guaranteed Universal $20 million during the first seven years of the contract, the complaint said. Screen Gems has entered into sub-licensing agreements with tv stations for THESE CAUGHT JUSTICE DEPT. EYE These are the investigations and prosecutions now underway at the Dept. of Justice: INVESTIGATION • Purported tie-in practices by networks, forcing advertisers to use network-owned programs in place of independently-produced shows. INVESTIGATION • Potential tie-in by networks to use BMI instead of ASCAP music, because of network ownership interests in BMI. INVESTIGATION • M usic Corp. of America and other talent agencies. Forcing buyer to take unwanted talent in order to get wanted talent. INVESTIGATION • Music Corp. of America. Purchase of Paramount Pictures features. Tie-in potential to force clients to take unwanted talent to get wanted pictures. Or vice versa. PROSECUTION • Against Columbia Pictures, subsidiary Screen Gems and Universal Pictures. On deal whereby Screen Gems has exclusive tv distribution rights to Universal features. PROSECUTION • Against Loew's, C&C, Screen Gems, AAP, NTA and United Artists. For block booking of feature film libraries to tv stations. Page 50 • April 14, 1958 Broadcasting