Independent Exhibitors Film Bulletin (1939)

WHAT DOES CODE MEAN ON CANCELLATION? EXCLUSIVE WORD-BY-WORD RECORD OF DISPUTE BETWEEN ALLIED LEADERS AND FILM EXECUTIVE The right of the distributors to demand increased rentals to compensate them for pictures cancelled under the exclusion privilege in the proposed Code was the subject of the most exciting debate during the Allied Convention in Minneapolis. The participants were Al Steffes and Nate Yarains of Allied, and Grad' well Sears, general sales manager of Warner Bros. FILM BULLETIN obtained a verbatim transcript from the recording made of the Convention s proceedings and exclusively presents the highlights of the verbal fracas. Steffes, leader of Allied of the Northwest, in fiery mood, tossed the first bombshell by charging that the film attorneys had so distorted the original intent of the Code that he could no longer understand it. STEFFES (addressing William F. Rodgers, chairman of the majors' Code Committee) : "Now, the question as to whether or not we believe you are sincere. Honestly and candidly, I know that you three gentlemen (Rodgers, Sears and A. Montague) are sincere in your efforts, but I don t believe that there has been any sincerity evidenced in the entire document that was handed us yesterday morning. "You, yourself, said, Mr. Rodgers, thai the attorneys wouldn't allow you in do lliis. wouldn't allow you in do that. Grad saiil that it was amighty hard thing for you threenien representing the producers and distributors to agree to various things and satisfy (lie attorneys of sewn or eight companies. That is what's the matter with the motion picture business today, it's too g-d highly legalized! (Applause) We're talking here todaj about a motion picture code. I wonder what c ode. I . i oo. worked on that committee and everytime you worked nights, so did I. And Commissioner Myers and Colonel Cole and the rest of Lhe boys also worked nights. We left New York and re-convened in Chicago and there was a document -there was a dispute as to whether we agreed to it or nut — hut. nevertheless, there was a document handed to each and every man there. 1. speaking fur myself, thought that that « the code ot fair trade practices under which this industry was going to live in the future. "On Lis! Wednesday or Thursday, one of the trade papers carried a four page copy of a code which someone said was the code that was going to he used. Lo and behold, the day before this convention opened. I was advised that that wasn't the code — that there was a new one forthcoming. The new one, I believe, was handed to me sometime yesterday morning. I read the preamble and two paragraphs, i lien threw it away, because I w as not intelligent enough to discuss something that I knew nothing about. And. gentlemen, that is NOT the code I worked on in New York or in Chicago." CHaRGES CHISELING ALREADY I iking up Rodgers declaration that there would be no chiseling on the pari of the distributors in administering the code. Steti'es fired again. STEFFES: "Now you talk about chiseling. 1 know that these men (exhibitors) to my righl and to my left, if they had the intestinal fortitude, would be up here to beat me to this mike, but they are a lit ile timid, ifou > iy that after this code is put into effect, there will be no chiseling. Gentlemen, you're wrong. The chiseling has already started! '•There are managers sitting right in this room from the Minneapolis territory who nave told, not one. but two or more exhibitors that if you men expect your 20 percent cancellation we must raise your film rental this year an equal amount. If that isn't chiseling, I don't understand the meaning of chiseling. "You liavemanagers who are working for major companies sitting in Ibis room, who have told, not one. but eight — that I know of — theatre owners 'if you want to buy our features voir re going to buy our shorts— and we don't give a (la : n what New York says to you. Thej have given me a definite quota to hit for ibis territory and I'm going to hit it!' "Now, Kill (Rodgers), j [uestion why a of the Allied leaders are ~o persistent in arguing about a certain word or group of words in a code for this industry. If you were out in the field like we are and had theatre owners coming to you daily, telling what your men in the field are doing, you would realize why we're lighting to see thai the t'a arc properly crossed and the i's dotted. • | -aid a year ago last February fchaf I'm ashamed that I'm nut connected with .an industrj big enough to regulate itself. 1 still say thai. I don't think, Bill, thai we've gone very far in the last year, with all our work and all our sincere efforts, because 1 think the attorneys have lorn down overnight all of the things that we. in a constructive way. tried to put inlu this industry. ''One paragraph says we're going to get 20 percent cancelation, Your salesman says: 'You paid $3,000 last year; you're rental is $3600 this year. Take your 20 percent cancellation and we still get our $3,000'." SEARS DEFENDS POLICY Sears took the floor and made the point that the purpose of the cancellation privilege, as he understood it, was for greater selectivity for the exhibitor. It was nut intended to be a cancellation for money he said. Steti'es replied thai it was his understanding th.it the purpose was two-fold; greater selectivity and to give exhibitors an opportunitj io buy from more companies. SEARS: "llul the problem you presenl is one of cancellation as lo money on the contract. I've never undersi I it that way. In other winds, if a sales i got $3,000 last year and he wants $3,600 or $4,000 this year. thai, in the final analysis is money. What has that got to do with the cancellation?" STEFFES: "Mr. Sears, that's all right if he wants to ask $3,600 for his film, but when he says to the t heal re owner, 'you expect your 20 percent cancellation, don't you? . . . Yes, I do . . . Then we'ee got to charge you ••>•'!• boo. so if you cancel 20 percent, we still get -3,000 out of you'." SEARS : "That's light. What's wrong with that?" STEFFES: "Well. Grad, let's quit kidding ourselves. We don't need any cancellation if we want to pay fur the films that we're cancelling. Is there anything in the presenl contract that prevents an exhibitor from paying fur any pictures and not play them, if he buys them on a Mat rental'.'" SEARS: "Well, there's nothing to prevent him. bill ..." STEFFES: "Then why do we want to sit here and argue about a cancellation privilege unless we want some credit for those pictures we cancel, so we can use that money and give it to Ray Johnston or someone else for some other pictures we may need. If we-'ve still got to pay you fur all the pictures we buy. let's forget the cancellation and say there is none.'' YAMINS QUESTIONS SEARS Nate Yamins, former president of National Allied, asked Sears if it was ever his impression that the cancellation clause would cost his company any money. The Warner executive answered. "Never anywhere along lhe line!" YAMINS: "I'm going to ask you this so that there cannot be any possible misinterpretation on the pari of any man who ever reads the cancellation clause. Wouldn't it have been simpler to have said. 'Exclusion Clause: Exhibitors shall have the right to cancel 20 percent of his products, provided he pays for it'? That makes it what you mean. If it was your intent, as you conveyed it to us. why not give us a loo percent cancellation clause. You do not lose in any way, because you get your money." (Applause) SEARS: "What we charge for our film is not subject to arbitration or arguement. That's simplj the method by which we sell." YAMINS: "There's no dispute about that. We are on all fours thai you have the right to negotiate a contract for as much money as you can get the exhibitor to pay. But, once having negotiated that contrail, the exhibitor wants to know what his rights are. He wants to reject a picture, and your explanation of it is simply this: The exhibitor pays for the picture he eliminates and. if he exercises his right of selectivitj by going to someone else, lie now pays for another picture." SEARS. "No, that is nut what I said. The exhibitor does not pay for lhe pictures he eliminates. The elimination is free and clear." YAMINS: "Wait a minute, you justified a minute ago that if a salesman went to in exhibitor and his contract for pictures last war was for $.'5,000. you justified his charging $3,600 because the man was going to eliminate 20 percent. You said. 'What's wrung with it . . . It's all right . . . He now geis selectivity.' That was your decision." SEARS: " And I repeat, $3,600 or $36,000." YAMINS: "Is Okay?" SEARS: "If it's a fair contract ..." YAMINS: "Now, listen, let's not fake lhe question, Grad. Lei's slick lo lhe point. If you made a mistake, admit it ami lake back your statement." SEARS: "Thai is the statement I made and I slill stand behind that statement." YAMINS: "Wait a moment, Grad. I understand that everything you say and that I say is being recorded ..." SEARS: "That's all light with me!"