Independent Exhibitors Film Bulletin (1938)

APRIL 23rd, 1938 CHARGE AT MAJORS part of the distributor to deliver any specific pictures, or, for that matter, any pictures at all. Among the provisions of the printed form are those (a) requiring advance payment of fixed rentals and payment promptly on the conclusion of the run of percentage rentals; (b) prescribing the time after notice of availability in which an exhibitor must book a picture; (c) fixing the exhibitor's liability for loss of or injury to prints; (d) preventing a subsequent run theatre from advertising a picture prior to or during its exhibition in a prior run theatre; and (e) requiring the exhibitor to assume the burden of all taxes on the delivery or exhibition of films. These, however, are trivial compared to the terms and conditions which distributors now, in pursuance of their so-called national policies, write into the printed forms. I have already mentioned the method of leasing pictures under an arrangement involving guarantee plus percentage. By insisting on this form of deal the distributor, without any investment in the brick and mortar, forces himself into partnership with the exhibitor who operates the theatre. But this is strictly a limited partnership. It provides for sharing the profits but not for any sharing of the losses. If the picture fails to gross a sufficient amount to cover the amount of the guarantee, the exhibitor must make up the difference. If the picture is successful and the revenue soars, the distributor takes his cut of the overage, frequently on an ascending scale. The problems of overhead, operating cost and taxes are left to the exhibitor to talk over with his pillow in the vigils of the night. Having thus become a partner in the theatre, the distributor asserts and, by reason of his control of the necessary product, maintains his right to regulate the operating policy of the theatre. As already pointed out, the exhibitor, by reason of compulsory block booking and blind selling, has little or no choice as to the pictures he exhibits. As a partner in the enterprise the distributor insists on establishing minimum admission prices. This not only tends to increase the distributor's share of the gross but also enables him to regulate competition between different theatres in the same competitive area. This power becomes very valuable where the distributor has his own theatres in the zone. Since Saturdays and Sundays are the big attendance days, the distributor insists on the right to designate particular percentage pictures for playing on those days. Thus the exhibitor who has no choice as to what pictures he will play, also is denied any discretion as to the day or days of the week on which he will play them. Time will not permit nor will the importance justify an account of the manner in which clearance schedules in the various areas were first formulated or how they are now maintained and enforced. Suffice it to say that the clearance conditions are now written into the independent subsequent run exhibitor's contract by the film salesman or exchange manager by direction of the home office or at the dictation of the chain operating the prior run houses and the exhibitor takes it and likes — or, at least, does his best. 5. Control of the press. The motion picture business is served by a number of trade papers on which the exhibitors rely for information regarding industry developments. At one time or another most of these were independent and impartial in the treatment of news and in editorial policy. With only a few notable exceptions, these papers are dependent on producer advertising for revenue. In recent years rigid control has been exercised over these publications by withholding advertising from those which do not conform their policies to the desires of the Big Eight. Contracts guaranteeing to the more amenable publishers a stated amount of advertising over a period of years have been negotiated. Recently one admitted editorially that he had been punished by the withholding of advertising because he sided with the exhibitors in a controversy with one of the Big Eight last summer. 6. Secret agents. The Hays Association has been most active in the dissemination of propaganda designed to disarm critics of the movies and to circumvent measures which exhibitor and consumer groups have deemed necessary in the public interest. Doubtless all of you, or the organization to which you belong, have I BOSTON SPEECH received numerous pamphlets, leaflets and letters from the Hays office against the Neely Bill. To the extent that propaganda efforts have been open and above board, there can be no criticism. But much of the propaganda has been vicious because it has purported to emanate from disinterested sources when it in fact came directly or indirectly from the Hays Office. A report on motion pictures by the Federal Council of Churches of Christ in America, issued in 1931, relates how a well-known clubwoman was employed to carry on a speaking campaign in the interest of the major companies and how she did this ostensibly as an officer of her club without disclosing her connection with the Motion Picture Producers and Distributors of America. In addition, the Big Eight have been mainly instrumental in maintaining an exhibitors' association, financed by the contributions of the producer-affiliated theatres, which always takes a position antagonistic to that taken by truly independent organizations on every issue affecting the welfare of the independent exhibitors. The United States District Court in Nebraska has characterized that organization as "subsidized by and a subsidiary of" the Hays group. The president of this association, who poses as an independent motion picture exhibitor, spends a large part of his time appearing before legislative committees opposing measures sponsored by the independent exhibitors and welfare groups. It is needless to add that he has spent many weeks in Washington working to defeat the Neely Bill. 7. Resistance to assertions of public right. The Hays Association employs a chief of lobbying activities. The efforts of this man and his regular staff are supplemented from time to time by politicians and persons close to the Administration and recruited from whichever party is in power. The slightest intimation of any adverse action by Congress or any State legislature or other department or agency of Government will bring a locust swarm of lobbyists to the scene of action. Now a word as to the financing of the Hays Association. According to the testimony of S. R. Kent, President of Twentieth Century-Fox, before sub-committee of the House Committee on Patents, his company pays to the Hays Association annual dues amounting to approximately $100,000. This he said was based on a percentage of the total film rentals collected. He placed the total dues of all members at approximately $600,000, but added that the exact amount was known to only one man, Mr. Hays. However, assuming that all companies pay on the same basis, three other companies should each pay approximately as much as Mr. Kent's company, and the four remaining members should each pay at least half as much. This would make up the $600,000 without taking into account the other members, including Erpi (Western Electric), R. C. A., Eastman Kodak and the various producing companies releasing through the Big Eight. It is idle to speculate what the dues may be, since it is obvious that, in case of need, the resources of the Hays Association in combatting unwanted legislation are practically unlimited. 8. Discriminatory practices. Independent theatres, as I have stated, must lease their pictures blindly and in blocks. The affiliated chain theatres are privileged to lease selectively; that is to say, to select for playing a certain number of pictures less than the block after they have been completed and their boxoffice value has been tested. A much more serious aspect of this discrimination resides in the favoritism practiced in selling to chain theatres as against independent theatres in competitive situations. When an affiliated chain decides to invade a particular location, it notifies all distributors of this fact and requests them not to make leases of film therein until the chain is ready to enter into negotiations. Regardless of whether the independent theatre or the chain theatre is the better one, the independent invariably loses all the choice product to the chain. Often the independent cannot even buy the individual pictures discarded by the chain house. Neither can he buy second or any subsequent run on the pictures the chain Joes use. For the most part he is forced to fall back on the inferior product of the few surviving State's rights exchanges. He is faced with ruin and sooner or later must relinquish his theatre to the chain.