The Exhibitor (Nov 1948-Feb 1949)

10 Nov, 29 New Date For Decree Hearing New York — The industry decree case resumed again last week before the spe¬ cial U. S. District Court, and after three days’ hearings it was adjourned for three weeks. As was generally expected, the court approved the consent decree be¬ tween RKO and the government. As a result, RKO is no longer a defendant in the equity suit. UA objected on a legal point, but it was denied on the grounds that a consent decree entered into prior to the taking of evidence is not then in itself prima facie evidence in treble damage actions. The RKO stockholders must now vote on the consent decree arrangement, by which the RKO production-distribution and theatre divisions will be entirely separate. Under the theatre plan, the RKO theatres circuit will become 109 theatres in strength, with RKO giving up an interest in 211 theatres. At the end of the third day’s hearings, the court ordered a three-week adjourn¬ ment to allow opposing counsel to explore the possibility of eliminating the question of “joint ownership” theatres, and to expe¬ dite the actual trial period by stipulations instead of examining witnesses. The adjournment to Nov. 29 followed agreement by opposing attorneys, with stipulation by defense counsel that there would be no acquisition of theatres in the meanwhile. The second day’s hearings found Loew’s W. F. Rodgers as the sole witness. He described changes in selling since the court’s opinion was handed down on June 11, 1943, outlining all the steps taken. Considerable statistical data was intro¬ duced, with Loew’s attorney John W. Davis leading the way, to show the effects of these changes, including competitive bidding. However, the court inferred that because of the fact that the U. S. Supreme Court held competitive bidding as im¬ practical, “whether it can lead to anything in the light of the Supreme Court’s bid¬ ding is doubtful.” Davis then revealed Loew’s plans to break up interests with Paramount in 13 Buffalo houses as well as intere:. fs in the Lee, Richmond, Va.; Parkway, Brooklyn, and the Criterion, New York. This was followed by the sug¬ gestion which led to the adjournment. Following Davis, former State Supreme Court Justice Joseph Proskauer began Warners’ defense, calling W. S. McDonald, assistant treasurer for WB, who gave a history of the company to show that it could not be considered monopolistic. W. N. Seymour, Paramount attorney, then made the suggestion for adjournment, to which John Caskey, 20th-Fox; Edward Raftery, UA; Louis Frolich, Columbia, and Cyril Landau, U-I, agreed. 20th Century-Fox also filed a memor¬ andum with the court asking for a nation¬ wide system of arbitration. The company' objected to certain points in the govern¬ ment’s decree relative to conditioning the necessity of clearance to the amount of prints available and the restriction of the meaning of clearance by a series of defi¬ nitions, and the suggestion that there is in fact, a territory division among the defendants. The company also claimed in its memorandum that the effect of the THE EXHIBITOR Schlaifer Named EL Sales Chief NEW YORK— L. J. “Jack” Schlaifer last week was named general sales manager of Eagle Lion by William J. Heineman, vice-president in charge of distribution. Schlaifer joined Eagle Lion in Feb¬ ruary, 1948, after serving as Allied Artists-Monogram director of sales for two years. He had previously been 20th Century-Fox’s central sales man¬ ager from 1943 to 1945, prior to which he had served as vice-president of Edward Small productions for three years. Schlaifer was also honored by hav¬ ing the EL drive named for him. He was revealed as the “Mystery Man” of the company campaign. competitive bidding system in fhose cemmunities where a warranted request is made by a theatreman renders the relief of divorcement and divestiture unneces¬ sary. Columbia, UA, and Universal, through counsel, asked elimination of the proposed injunction by the government against certain trade practices. Wright rested his case with reserva¬ tions to the submission of evidence toward challenged affidavits, regarding grosses of Republic, Monogram, and PRC. Davis also told the court that a system of arbitration to be embodied in the final decree will be proposed by defense counsel. It was believed likely that “partial di¬ vorcement” will be the solution to much of the defendants’ divorcement problem. Senior Judge Augustus N. Hand declared, “I do not believe that the opinion of the Supreme Court spells divorcement. Their opinion indicates not a wholesale divorce¬ ment but suggests it as a remedy.” The hearing last week started with the Department of Justice’s Robert L. Wright introducing further evidence to argue for divestiture and a partial ban on crosslicensing. Proskauer, representing Warners, ad¬ mitted that WB was a vertically inte¬ grated company, but declared that this was not illegal of itself. He denied con¬ spiracy or monopoly as the result of the company’s acquisitions, although he ad¬ mitted that the company had been found guilty with regard to certain trade prac¬ tices’ illegality. He also indicated that some divorcement might well be ordered by the court, and asked that the final decree include an arbitration system. On the third day, Columbia voiced opposition to any industry arbitration plan when the court queried the anti¬ trust defendants on the issue. Judge Hand had intimated that he would look favor¬ ably upon such a joint arbitration pro¬ posal when it was indicated by War¬ ners’ counsel that such a proposal was in the final stages of preparation. Para¬ mount, Loew’s, and 20th Century-Fox said they would join in support of the plan, and RKO, although eliminated from the trial as the result of its consent decree with the government, had tentatively agreed to become a part of a new arbi¬ tration system. Columbia counsel said: “Columbia has nothing to gain from arbitration since experience has proved that the same ex¬ hibitors who arbitrate frequently come along later and initiate treble damage suits.” It was indicated that UA and U-I would consider and examine any proposal made but could make no commitment now. Counsel for 20th Century-Fox revealed that representatives of Eagle Lion, Mono¬ gram and Republic had been invited to become part of an arbitration setup, and that they had agreed to participate in ensuing discussions. It is expected that the defendant pro¬ posal will be submitted to the Depart¬ ment of Justice within a few weeks since acceptance of the plan by the government would almost insure its incoi'poration into the court’s final decree. {Continued on page 12) Confidence Is What Counts (Continued from page 5) 5200 pages were used, it ap})ears that this year’s total stands a good chance of l)eiiig less than 1936. A simple table of grosses, 1936-1948, will prove the additional grosses today flon t compare with the present advertising l)udgets. It has been long since admitted that no industry serves its jieople better than do the motion picture trade papers. The trade papers have plenty of proof of this when a drive for Joe Doakes. Ed Whoosis, or even Sam Whatsis takes place. As to the statement that there is duplication of coverage, if it’s necessary to help the various drives to sell the customers when the sale of pictures takes place, why is it not logical that proper advertising is necessary to sell the pictures? It can safely he concluded when the volume of ads goes down, in the face of rising costs, rates have to go up. These are facts that can’t he disputed. They will probably he enlightening to a lot of exhibitors and exhibitor organizations, as well as to producers and distrihutox's. November 17, 1948