The Film Daily (1940)

H» Wednesday, October 30, 1940 FORBIDS WITHHOLDING AVAILABLE PRINTS (6) The extent to which the theaters involved compete with each other for patronage ; and (7) All other business considerations, except that the arbitrator shall disregard the fact that a theater involved is affiliated with a distributor or with a circuit of theaters. The power2 of the arbitrator in deciding any such controversy shall be limited to making (1) a finding as to whether or not the clearance complained of is unreasonable; and, if the finding be in the affirmative, (2) an in :Naward fixing the maximum clearance between pel | \he theaters involved which may be granted An licenses thereafter entered into by the distributor defendant which is a party to the arbitration. Subject to the provisions of Section XVII hereof, the award may fix such maximum clearance under any then existing franchise or any license entered into pursuant to such franchise between such distributor defendant and any other party bound by this decree. (2See footnote 3 to Section IV.) Any distributor defendant or any exhibitor affected by such an award may institute a further arbitration proceeding for a modification thereof upon the ground that since the making of the award the conditions with respect to the theaters involved therein have so changed as to warrant modification, and, in the event that the arbitrator finds that there has been such change,2 he shall make a redeterminination of the maximum clear (2See footnote 3 to Section IV.) Nothing contained in this Section shall be deemed to restrict, and no award made in any arbitration under this Section shall restrict, the exhibitor's right to license for any theater any run which he is able to negotiate with any distributor, nor the distributor's right to license for any theater any run which it desires to grant. Nothing contained in this Section shall award hereafter entered in any arbitration in accordance with its provisions shall apply to licensing the exhibition of any special feature3, provided such special feature is licensed under an exhibition contract applicable only thereto, or to the right of a distributor defendant to include in such contract and to make a part thereof such special terms and conditions, including such special clearance provision or provisions, as such distributor shall fix, establish and enforce for and in connection with the exhibition of such special feature. (3For the purposes of this Section, a special feature means a feature which for a period of time is exhibited at generally advanced first-run admission prices.) BOOKING PRINTS IX. In booking prints for exhibition by exhibitors competing on the same run in the same exchange district,* a distributor defendant shall not withhold delivery of prints available in its exchange from one exhibitor in order to give a competing exhibitor a prior playing date not provided for in his license. It is recognized that distributors must be permitted discretion in the ordinary course of booking and distributing films in an exchange district when too few prints are available in the exchange for the playing date desired by two or more theaters. In such cases this Section shall have no application. (}See footnote 4 to Section III.) Violations of this Section shall be subject to arbitration and, if the arbitrator finds2 that the distributor complained against has pursued a policy of withholding available prints from the complaining exhibitor in violation of this Section, he shall enter an award directing the distributor to discontinue such policy. ("See footnote 3 to Section IV.) REFUSAL TO LICENSE Controversies arising upon plaint by an independent exhibitor* that a distributor defendant has arbitrarily refused to license its features for exhibition on the run requested by said exhibitor in one of said exhibitor's theaters which was in existence or which replaced2 a theater in existence at the date of this decree shall be subject to arbitration. (M» independent exhibitor, as used in this Section, is one wholly independent of any circuit of more than five theaters and not affiliated either by stock ownership, common ownership, common buying or otherwise with a circuit of more than five theaters and whose licenses are not negotiated by a buying combine or common buying agent negotiating for more than five theaters.) ("A theater shall not be deemed to have replaced such an existing theater unless erected in the same neighborhood as one which was destroyed or permanently abandoned as a theater, for the purpose of succeeding to its patronage, and with a seating capacity not more than 25 per cent greater than that of the theater replaced. B. In any such arbitration no award shall be made against a distributor defendant unless the arbitrator shall first find the following facts: (1) The complainant is an independent exhibitor and the theater operated by him and specified in his complaint was in existence at the date of the decree or replaced such a theater; and (2) Such refusal of the distributor to license its features for exhibition in the complainant's theater on the run requested by the complainant continued during a period of not less than three successive months; and (3) The distributor during such period has licensed the features requested by the complainant on the run requested by him to a theater (sometimes hereinafter referred to as a circuit theater) which was in competition with the theater specified in the complaint and which was a component of a circuit of not less than 15 theaters or which was affiliated either by stock ownership, common ownership, common buying or otherwise with a circuit of not less than 16 theaters or the licenses for which were negotiated by a buying combine or common ouying agent negotiating for not less than 15 theaters; and (4) The complainant's theater has not available to it features sufficient in nature and quantity to enable it to operate on the run requested by the complainant; and (5) (a) Subsequent to July 20, 1935 and prior to July 20, 1940 the complainant operated the theater specified in his complaint on the same run as or on an earlier run than that enjoyed by the circuit theater specified in the complaint; or (b) Subsequent to July 20, 1940 and during the two consecutive motion picture seasons3 immediately preceding the filing of the complaint, the complainant operated the theater specified in his complaint on the same run as or on an earlier run than that enjoyed by the circuit theater specified in the complaint and during such period exhibited on such run substantially all the features released during such period by the distributor compalined against; or (M motion picture season means the period from September 1 of one year to August 31 of the next year.) (c) Subsequent to July 20, 1935 and prior to July 20, 1940 the complainant demanded in writing4 features for the theater specified in his complaint from the distributor complained against on the same run as or on an earlier run than that enjoyed by the circuit theater specified in the complaint; or the complainant had filed with a Local Clearance and Zoning Board or a Local Grievance Board under the Code of Fair Competition for the Motion Picture Industry approved pursuant to the National Industrial Recovery Act such a complaint which was not finally disposed of by administrative decision under said Code prior to May 27, 1935; or ^Demands in writing shall be deemed to include complaints in writing to the Department of Justice.) (d) The complainant operated the theater specified in his complaint for at least one year prior to the entry of this decree, and subsequent to July 20, 1935 and prior to July 20, 1940 a prior operator of said theater had demanded in writing5 features from the distributor complained against on the same run as or on an earlier run than that enjoyed by the circuit theater specified in the complaint: or the complainant had filed with a Local Clearance and Zoning Board or a Local Grievance Board under the Code of Fair Competition for the Motion Picture Industry approved pursuant to the National Industrial Recovery Act such a complaint which was not finally disposed of by administrative decision under said Code prior to May 27, 1935: and (t>See footnote 4 to this Section.) (6) Such refusal to license the exhibition of said features in the complainant's theater specified in his complaint was in fact because the theater licensed to exhibit them on the run requested by the complainant was a circuit theater. C. In determining whether the exhibitor's complaint is established by the evidence, the arbitrator shall take into consideration, among other things, the following factors and accord to them the importance and weight to which each is entitled, regardless of the order in which they are listed: the terms, if any, offered in respect of each of the two competing theaters: the seating capacity of each of said theaters; the capacity of each for producing revenue for the distributor; the character, appearance and condition of each, including its furnishings, equipment and conveniences: the location of each of said theaters; the character and extent of the area and population each serves: the competitive conditions in the area in which they are located: their comparative suitability" for exhibition of the distributor's features on the run requested; the character and ability of the exhibitor operating each and his reputation generally in the industry and in the community for showmanship, honesty and fair dealing: the policy under which each of the theaters has been operated and the policy under which the complainant proposes to operate his said theater if he obtains the run requested; the financial responsibility of the exhibitor operating each of said theaters: and the distributor's prior relations with each of the two theaters involved and with their owners and operators and any equities arising therefrom. (67n considering this factor in situations where the exhibitor customarily exhibits features in two or more theaters on the same run in the same situation as a unit by contracting for groups of features on an "or" basis (i.e., for exhibition at one of two or more specified, theaters) all of such theaters may be considered collectively as a unit.) D. If in any such arbitration the arbitrator finds' for the complainant, he may enter an award against the distributor which shall not affect the license to exhibit any feature then under license to the circuit theater but which shall prohibit such distributor from thereafter licensing its features for exhibition either in the circuit theater specified in the complaint on the run requested by the complainant, or in the complainant's theater specified in the complaint, on such run, otherwise than by a separate contract or agreement which shall not be a part of any contract or agreement for the licensing of features for exhibition in any other theater or conditioned upon the licensing of features for exhibition in any other theater. E. After a final award in favor of a complaining exhibitor has been made under this Section, such exhibitor may institute a further arbitration proceeding (to be held before the arbitrator who entered the original award, if available) upon the ground that such award has not been complied with in good faith by the distributor against which it was entered. If any such proceeding the arbitrator shall find7 that the distributor has not complied in good faith with the original award, the arbitrator may award damages to the exhibitor for loss resulting from the distributor's failure to comply with the original award but any such CSee footnote 3 to Section IV.) Any further arbitration proceeding for an award of damages for violation of the original award must be commenced within sixty days after such violation has occurred, by filing a statement specifying the facts constituting each alleged violation for which damages are sought and the exhibitor's alleged damages resulting from each such alleged violation. No award of damages shall be made in any such proceeding for any violation of the original award not occurring within said sixty-day period, but prior violations may, in any such proceeding, be considered by the arbitrator as evidence bearing upon the question of the distributor's good faith. ACQUIRING THEATERS XI. (1) For a period of three years after the entry of the decree herein each of the conesnting defendants will notify4 the Department of Justice immediately of any legally binding commitment for the acquisition by it of any additional theater or theaters. (2) During such period each such defendant will also report^ to the Department of Justice on or before the tenth day of each month the changes in its theater position, if any, that have occurred during the preceding month, as follows, together with a statement of the reasons for such changes: (a) Theaters contracted to be built, or under construction; (b) Theaters lost or disposed of; (c) Theaters acquired; (d) Interests in theaters acquired, with a statement of the nature and extent of such interests. (}The notification and report shall include such commitments and changes as may have been made by corporations not parties to this decree which are controlled by such defendant. They shall also include such commitments or changes as may have been made by corporations in which such defendant owns a financial interest but which it does not control, if such defendant has received knowledge of such commitments or changes. Each defendant will request such corporations to notify it immediately of any such commitment or change.) (3) If upon receipt of such information the Department of Justice requests any such defendant to furnish further information with respect to any of the above transactions in which it is involved, such defendant will make a reasonable effort to supply such information promptly. (4) No information furnished under subdivision (1), (2) or (3) hereof shall be divulged by any representative of the Department of Justice to any person other than a duiy authorized representative of the Department of Justice, except in the course of legal proceedings to which the United States is a party, or as otherwise required by law. (5) For a period of three years following the entry of this decree, no consenting defendant shall enter upon a general program of expanding its theater holdings. Nothing herein shall prevent any such defendant from acquiring theaters or interests therein to protect its investment or its competitive position or for ordinary purposes of its business. Proceedings based on a violation of this subdivision (5) shall be only by application to the Court for injunctive relief against the consenting defendant complained against, which shall be limited to restraining the acquisition, or ordering the divestiture, of the theaters or interests therein, if any. about to be acquired, or acquired, in violation of this Section. CAUSE FOR INOPERATION XII. (a) If, prior to June 1, 1942, a decree shall not have been entered against the defendants United Artists Corporation, Universal Corporation and Columbia Pictures Corporation, requiring each of them to trade show its features before licensing the same (Continued on Page 8) Controversies Subject to