The Film Daily (1940)

W** DAILY; Wednesday, October 30, 1940J FULL TEXT OF GOV'T'S CONSENT DECREE Complete text of the draft of proposals for a consent decree in the New York equity suit follows: UNITED STATES — against — PARAMOUNT PICTURES, INC., et al. Draft of Proposals for Consent Decree Th° United States of America having filed its Petition herein on July 20, 1938. and its Amended and Supp'emental Comnlaint on , 1940; the defendants; Paramount P". "turps Inc.; Paramount Film Distributing regeneration; Loew's. Incorporated; RadioKeith-Orpheum Corporation; RKO Radio Picfcjres. Inc.; Keith-Albee-Orpheum Corporate: RKO Proctor Corporation; RKO Midwest Corporation: Warner Bros. Pictures. Inc.; Vitagraph Inc.; Warner Bros. Circuit Management Corporation; Twentieth CenturyF-x Fi"m Corporation; and National Theatrrs Corporation1 having appeared and severaPy filed their answers to such Petition and to such Amended and Supplemental Complaint and having asserted the truth of their an'-.wrs and their innocence of any violation of law: and no testimony having been taken, but each of the consenting defendants having consented to the entry of this decree without any findings of fact, upon condition that neither such consent, nor this decree itself, mr the entry of this decree, nor any statement, provision or requirement contained in th:s decree, shall be or shall be construed ps being (1) an admission or adjudication that the allegations of the Petition or of the Amended and Supplemental Complaint, or any of them, are or is true, or that such defendants, or any one or more of them, have or has violated or are or is violating any statute or law, or (2) evidence that such allegations, or any of them, are or is true, or that such defendants, or any one or more of them, have or has violated any statute or Ipw. or (3) an admission or adjudication that the doing of any of the acts or things h"r"'«aft"r enjoined or the failure to do any of the acts or things hereinafter directed to be done would constitute a violation of any statute or law, and upon the further conditions hereinafter set forth; and the United States of America, by its counsel, having consented to the entry of this decree and to each and every provision thereof upon such conditions, and having moved the Court for the entry of this decree; (}The above named defendants are referred to hereinafter as the consenting defendants.) THEREFORE. IT IS ORDERED, ADJUDGED AND DECREED as follows: JURISDICTION The Court has jurisdiction of the parties hereto; and for the purposes of this decree and of proceedings for the enforcement thereof, and for no other purpose, the Court has jurisdiction of the subject matter hereof and the comp'aint states a cause of action against the defendants under the Act of Congress of July 2, 1890 entitled "An Act to Protect Trade and Commerce Against Unlawful Restraints and Monopolies." ENJOINMENT ii. Each consenting defendant, its successors, officers, directors, agents and employees, and all persons and corporations acting under, through, or for it. hereby is and are enjoined from doing the acts prohibited by thi? decree, and is and are directed to do the acts th< •eby required. TRADE SHOWS in. No consenting defendant engaged in the distribution of motion pictures (hereinafter referred to as a distributor defendant) shal license or offer for license1 a feature motion picture2 (hereinafter sometimes referred to as a feature) for public exhibition within the United States of America at which an admission fee is to be charged, until the -feature has been trade shown' within the exchange district1 in which the public exhibition is to be he'd. Every trade showing shall be preceded by a notice, published in a trade publication having general circula tion among exhibitors" in such exchange district, which shall state the title of the pic (}License means {as a verb) to make an agreement, or (as a noun) an agreement, by which a distributor grants the right to exhibit a motion picture in any theater engaged in the the exhibition of motion pictures for profit.) _ ("A feature motion picture is a motion picture approximately 5,000 feet, or more, in length.) (SA trade showing is an exhibition of a feature at a theater or projection room for the benefit of exhibitors generally.) (fEac/t distributor defendant shall file with the Department of Justice a map of each of its exchange dist.icts, showing the territorial limits thereof. Changes in the territorial limits of an exchange district shall be made only after two weeks' notice to the Department of Justice. References in this Section and in Sections V and IX hereof to exchange districts are to exchange districts of each distributor defendant, as constituted from time to time.) (fT.ade publication means a daily or weekly newspaper or magazine which is devoted primarily to news concerning the motion picture industry.) (^Exhibitor means any individual, partnership, unincorporated association or corporation engaged in the public exhibition of motion pictures in a theater or theaters for profit.) BLOCKS OF 5 IV. (a) No distributor defendant shall offer for license or shall license more than five features in a single group. In offering its features for license to an exhibitor a distributor may change the combinations of features in groups as it may from time to time determine, and may license or offer for license as many groups of features as it may from time to time determine, provided that ihe license or offer for license of one group of features shall not be conditioned upon the licensing of another feature or group of features. (b) No distributor defendant shall require an exhibitor to license short subjects, newsreels, trailers, or serials (hereinafter collectively referred to as shorts) as a condition of licensing features. No distributor defendant shall require an exhibitor to license reissues, westerns,1 or foreigns2 (hereinafter collectively referred to as foreigns) as a condition of licensing other features. ^Westerns are those western pictures which are not of the usual characted and type of, and are inexpensively produced as compared with, the distributor's general line of feature.) (2Foreigns are featu.es produced outside of the United States except such as are produced in the English language by the distributor or a snubsidiary or affiliate thereof.) Where a license has been entered into, controversies arising upon a complaint by an exhibitor that the licensing to him of one •Troup of features was conditioned by the distributor upon the licensing of another feature or group of features or the licensing jf shorts or foreigns shall be subject to arbitration. An exhibitor shall have no right to assert any such claim unless he shall have mailed to the distributor at its Home Office i notice in writing of such claim and of .he grounds thereof, not later than two days .fter receipt by the exhibitor of the distributor's written approval of the exhibitor's ■igned application or applications for such eatures, shorts or foreigns. The power3 f the arbitrator in deciding any such conroversy shall be limited to making (1) a lirding as to whether or not the licensing of iueh features was so conditioned: and, if he finding be in the affirmative, (2) an iward cancelling the license for (or to the extent that it may relate to) such other feature ir group of features, or such shorts or for (-W hen, in any arbitration under this decree, ihe finding of the arbit. ator shall be that the complainant has not sustained his complaint, the arbitrator shal enter an award dismissing the complaint.) i-xhibitor that a distributor defi-ndani. offered for license to him more than features in a single group or that the offer of a license to him of one group of features was conditioned upon the licensing of another feature or group of features, or the licensing of shorts or foreigns, shall be subject to arbitration. An exhibitor shall have no right to assert any claim that an offer so to license such features was so made or conditioned unless he shall have mailed to the distributor at its Home Office a notice in writing of such claim and of the grounds therefor not later than five days after the exhibitor claims the alleged offer was made. The power* of the arbitrator in deciding any such controversy shall be limited to making (1) a finding as to whether or not the offer to license such features was so made or conditioned; and, if the finding be in the affirmative, (2) an award imposing upon the distributor making such offer a penalty in an amount not to exceed $500.00. Such penalty shall be payable into the arbitration fund referred to in subdivision 8 of Section XXII hereof. (4See footnote 3 to this Section.) LICENSES BY EXCHANGES No license for features to be exhibited in theaters located in one exchange district1 shall include theaters located in another exchange district, nor shall the licensing of features for exhibition in theaters located in one exchange district be conditioned upon the licensing of a feature or group of features for exhibition in theaters located in another exchange district. Q-See footnote 4 to Section III.) Controversies arising upon a complaint by an exhibitor thereby affected that the licensing by a distributor defendant of features for exhibition in theaters located in one exchange district was conditioned upon the licensing of a feature or group of features for exhibition in theaters located in another exchange district shall be subject to arbitration. The power2 of the arbitrator in deciding any such controversy shall be limited to making ( 1 ) a finding as to whether or not the licensing of features for exhibition in theaters located in one exchange district was so conditioned upon the licensing of a feature or group of features for exhibition in theaters located in another exchange district; and, if the finding be in the affirmative, (2) an award imposing upon the distributor defendant so licensing features a penalty in an amount not to exceed $500.00, payable into the arbitration fund referred to in subdivision 8 of Section XXII hereof. (-See footnote 3 to Section IV.) NO LICENSING REFUSAL VI. No distributor defendant shall refuse to license its pictures for exhibition in an exhibitor's theater on some run (to be designated by the distributor) upon terms and conditions fixed by the distributor which are not calculated to defeat the purpose of this Section, if the exhibitor can satisfy reasonable minimum standards of theater operation and is reputable and responsible, unless the granting of a run on any terms to such exhibitor for said theater will have the effect of reducing the distributor's total film revenue in the competitive area in which such exhibitor's theater is located. Controversies arising upon a complaint by an exhibitor that, contrary to the provisions of this Section, a distributor defendant has refused so to license its pictures shall be subject to arbitration. The power1 of the arbitrator in deciding any such controversy shall be limited to making (1) a finding as to whether or not, contrary to the provisions of this Section, the distributor has refused to license its pictures to the complainant for exhibition in said theater; and, if the finding be in the affirmative, (2) an award directing the distributor to offer its pictures for license to the complainant for exhibition in said theater on a run to be designated by the distributor and upon terms and conditions fixed by the distrnbutor which are not calculated to defeat the purpose of this Section. The burden of showing that granting a run on any terms to the complainant will have the effect of I reducing the distributor's total film revenue in the competitive area in which the complainant's theater is located shall be upon the distributor. (}See footnote 3 to Section IV.) Any distributor defendant affected by such an award may institute a further arbitration proceeding to be relieved therefrom on the ground that since the making of the award the granting of a run in compliance therewith has had the effect of reducing the dis tributor's total film revenue in the compel tive area in which the complainant's theatei is located, and, in the event that the arbitrator finds that the granting of a run in compliance with the award has had the effect j of reducing the distributor's total film revenue in said area, he shall vacate the awards (2See footnote 3 to Section IV.) CANCELLATION RIGHTS vn. Controversies arising upon the complaint of an exhibitor that a feature licensed to him by a distributor defendant for exhibition in a particular theater is generally offensive in the locality served by such theater on moral, religious or racial grounds shall be subject to arbitration. An exhibitor shall have no right to assert any such claim unless written notice of his election to cancel such feature, together with a statement of his reasons therefor, shall have been mailed to the distributor defendant at its Home Office not later than ten days after the receipt by the exhibitor of the distributor's written approval of the exhibitor's signed application for such feature. In such event the license in so far as it relates to the exhibition of such feature in the theater specified in the notice shall be deemed cancelled unless within five days after receipt of such notice, the distributor shall have mailed to the exhibitor a notice in writing of its denial of such claim and of its intention to arbitrate the controversy. The power1 of the arbitrator in deciding any such controversy shall be limited to making (1) a finding as to whether or not the feature is generally offensive in the locality served by the exhibitor's theater on moral, religious or racial grounds; and, if the finding be in the affirmative, (2) an award cancelling the license in so far as it relates to the exhibition of such feature in said theater. (xSee footnote 3 to Section IV.) CLEARANCE vm. Controversies arising upon the complaint of an exhibitor that the clearance1 applicable to his theater is unreasonable shall be subject to arbitration under the following provisions : (^Clearance means the period of time, fixed by agreement between a distributor and an exhibitor, prior to the expiration of which a feature licensed for prior exhibition in a theater may not be exhibited in another theater or theaters.) It is recognized that clearance, reasonable as to time and area, is essential in the distribution and exhibition of motion pictures. In determining whether any clearance complained of is unreasonable, the arbitrator shall take into consideration the following factors and accord to them the importance and weight to which each is entitled, regard.ess of the order in which they are listed: ( 1 ) The historical development of clearance in the particular area wherein the theaters involved are located; (2) The admission prices of the theaters involved; (3) The character and location of the theaters involved, including size, type of entertainment, appointments, transit facilities, etc.; (4) The policy of operation of the theaters involved, such as the showing of double features, gift nights, give-aways, premiums, cut rate tickets, lotteries, etc.; ( 5 ) The rental terms and license fees paid by the theaters involved and the revenues derived by the distributor defendant from such theaters. Court Has Jurisdiction Over Decree Enforcement