Exhibitors Herald and Moving Picture World (Apr-Jun 1929)

May 5, 1928 EXHIBITORS HERALD and MOVING PICTURE WORLD 11 Injunction 1 0 Firms, Officials Welcome Test of Contract and Arbitration BY PETER VISCHER NEW YORK, May 1— Officials of the leading distributing companies and the Boards of Trade today expressed themselves as satisfied to go into court in defense of their uniform contract and arbitration plan. They were confident that the suit charging a conspiracy in restraint of trade, brought by Attorney General Sargent and United States Attorney Tuttle, against 10 companies, the M. P. P. D. A. and the Boards of Trade, would bring a welcome decision in their favor. Pettijohn Issues Statement In a statement issued immediately after the filing of the suit, C. C. Pettijohn, general counsel of the Film Boards of Trade, declared that the film industry knew there had been no conspiracy or restraint of trade and that arbitration in business is a modern and proper trend. His statement, in full, is published on the next page. Officials, many of whom discussed the matter at the sales conventions, generally were inclined to agree with the opinion expressed in Pettijohn's statement. Phil G. Reisman, general sales manager for Pathe, said he felt satisfied there had been neither conspiracy nor any restraint of trade, and that arbitration in motion pictures would stand the test of the courts. "The suit will test the validity of the uniform contract with its provisions for arbitration and of the credit committees of the Boards of Trade," according to Elek John Ludvigh, general counsel for Paramount. Wickersham Welcomes Test George W. Wickersham, former U. S. attorney general, who is acting as counsel for all the defendants, issued a statement in which he declared that arbitration has played an important part in bringing peace to the industry. "Our clients welcome the opportunity to test the legality of the Film Boards of Trade arbitration plan, which we are informed has been the small exhibitor's greatest single protection during the growrth of the motion picture industry and which its sponsors regard as the outstanding contribution by any group toward the development of industrial arbitration in the United States," he said. "The plan has been overwhelmingly satisfactory inside the industry. Under its provisions over 50,000 cases have been amicably settled, without litigation, during the past five years. Resultant confidence between seller and buyer has freed the small exhibitor from the former onerous necessity of posting large cash advances to lease films." The statement said that the industry has furnished "every facility to the Department of Justice during its investigation" and tha^ "the agents of the department received free access to the files of the Film Boards." Fire Stops Performance (Special to Exhibitors Herald and Moving Pieture World) SPOKANE, May 1. — A fire on the ground floor of the Granada theatre here did minimum damage. The blaze was extinguished with chemicals. The audience left the theatre, but soon returned, and the picture was continued. Suit Filed Against Hays Body and Boards Unfair Practices Are Charged; Arbitration System Is Tested Credit and Distribution Methods Also Are Under Fire, Says Department of Justice [Washington Bureau of Exhibitors Herald and Moving Picture World] WASHINGTON, May 1. — Injunction suits against ten of the leading motion picture corporations, the Hays organization and the 32 Film Boards of Trade, aimed at breaking up alleged unfair trade practices and establishing the legality of the credit, arbitration and distribution systems, were filed in the Federal' Court at New York Friday, the Department of Justice has announced. The ten companies named were the Paramount, Metro-Goldwyn-Mayer, First National, Universal, United Artists, Fox, Pathe, F B O, Vitagraph and Educational. All the members of each local Film Board of Trade also are made defendants, although such members are so numerous that they are not named individually. Sell 60 Per Cent of Films, Say Petitions Both petitions allege that the defendant corporations distribute approximately 60 per cent of all the motion picture films distributed annually in the United States and that the members of the Film Boards of Trade represent the distributors of approximately 98 per cent of all such motion picture films, "In August, 1926, the department an investigation of ajll complaints received by nounced that it had completed its investigation of the Film Boards of Trade," it was explained in a statement of the filing of the cases issued by the Department of Justice. "Certain practices which had been adopted by the local boards were objected to by the department and at its instance the Film Boards of Trade amplified the rules and regulations relating to arbitration, so as clearly to prohibit members of local boards from pursuing such objectionable practices. The operations of the credit committees of the Film Boards of Trade were not covered by the first investigation by the department. "Because, from its inquiry, the department found that the arbitration system constituted a fair, just and economical method of dealing with the disputes between exhibitors and distributors, it was decided at that time not to institute proceedings to test the legality of the system, but rather to observe its operations, effect and practical workings. Misleading Rumors Cited "In January, 1927, the department instituted a thorough and comprehensive investigation into practically every phase of the motion picture industry. This investigation is still being pursued vigorously, but due to the fact that it has covered a very large field, it has required minute study of detailed data and information. Progress of the work has been delayed also bv careful the department. Frequently such investigation has resulted only in loss of time, because the complaints themselves have too often been founded on rumor unsupported by evidence and as a result have been misleading. As the work progressed and as illegalities have been disclosed, the department decided without delay to submit to the court the determination of specific questions, so that stability and certainty could be established in the industry. Two Actions Taken "It is as a result of this investigation and the plan outlined that the present actions have been instituted. These actions are two in number. The first is entitled United States V. Paramount Famous Lasky Corporation et al. It is brought to test the legality of the agreement between the distributors of motion picture films to contract with exhibitors for the exhibition of motion pictures by contracts which contain all the terms and provisions of a standard exhibition contract and more particularly a provision for the arbitration of all disputes arising between exhibitors and distributors which have been established and operated by the Film Boards of Trade for enforcing awards of the Boards of .Arbitration. "The second action is entitled United States V. First National Pictures, Inc., et al. The purpose of this action is to test the (Continued on next page') Bill Raising Seat Tax Exemption to $3 Is Reported by Senate Finance Group [Washington Bureau of Exhibitors Herald and Moving Picture World] WASHINGTON, May 1. — The senate Rnance committee today reported its tax bill, increasing the admission tax exemption to $3, and providing that the commissioner of internal revenue may call for admission reports at any period in order to prevent evasion by prizefight promoters and one-night film theatres. The $3 exemption, the committee reported, was provided "that no tax will be imposed where the amount paid for admission is $3 or less, particularly in order to relieve the legitimate theatre from the disproportionate burden now imposed on it. The motion picture theatres seldom charge more than $1 and. as a result, as a practical matter, would be exempt from the tax." While the commissioner is given authority to demand reports at any time, it is not contemplated that he will abandon the present practice of having them submitted monthly by established theatres.