The Film Daily (1928)

I J February 19, 1928 OAILY o ok hart Bill Declares It Illegal I PRICE FIXING OVIDED IN MEASURE or such relation to tach othtr tnd to require an txhibitor to ch an entire block or group or he lease of any portion or porereof, en shall bear such rela tach other that the effect of oposed contract for the lease films may be substantially to ompetition or tend to create a y in any part of the certain commerce among the several to wit, the business of produc\tribution and exhibition of moure films. ion is an identical copy of parathe Order To Cease and Desist y 9, 1927, by the Federal Trade in its proceedings against Famous ky Corp. et al, Docket 835, except rd "copyrighted" has been inserted words "motion picture films" (line t of this section, the enforcement vested in the Federal Trade Com the provision of Section 7 (text ipears in next paragraph, and is set nrould be to deprive exhibitors and of the right to freely bargain and ;er and would eliminate all competirices, as it gives the commission the the prices at which the pictures are If this bill becomes a law, any not satisfied with the prices being pictures by any distributor may the commission and it will then it upon it to investigate the raat »liit \ full hearing and try out the to whether the prices complained enable or not, and as to whether 1 prices may substantially lessen or tend to create a monopoly. provisions (Sections 4 and 7) : Six months after the date of it shall be unlawful for any or distributor of copyrighted icture films in the current of e commerce to tease or offer ; for exhibition in any theater '■ ers copyrighted motion-picture ■■■' a block or group of two or more invd a designated lump-sum price h l< entire block or group only and : J e the exhibitor to lease all such 1 Hi permit him to lease none; or v.t or offer for lease for exhibition jjc tionpicture films in a block or K 11 f two or more at a designated , k'J w price for the entire block or meiiib d at separate and several prices ,11 »f rate and several films, or for i'li'i r or numbers thereof less than .i:!f; number, which total or lumpKiimvi \ce and separate and several reiirl hall bear to each other such (inn 0 as to operate as an unreason1 1 Je( 'raint upon the freedom of an ■ to select and lease for use ibition only such film or films block or group as he n\ay deprefer to procure for exhibisnall bear such relation to each ito tend to require an exhibitor such an entire block or group o the lease of any portion or thereof, or shall bear such reeach other that the effect of [posed contract for the lease of ' J may be substantially to lessen ■f on or tend to create a monopoly part of the certain line of e among the several States, to 'business of production, distribu' exhibition of motion-picture ' Administration of this Act in the Federal Trade Commis * if Illf I 0. ,lli ich is hereby authorised and td to make suitable rules and ns for giving effect to the prohtreof, including the power, 'I hearing, to fix the differenich may be observed between ' of a block or group of films price of a separate and sever films less than such block > as mentioned in section 4 Irt. Also these provisions (Section 4 and 7) give the commission "the power to fix the differentials which may be observed between the price of a block or group of films and the price of a separate or several film or films less than such block or group." Section 7 — Page 10 — Lines 5-8 Section 7, Page 10, Lines 5-8 — "to fix the differentials which may be observed between the price of a block or group of films and the price of a separate and several film or films less than such a block or group as mentioned in Section 4 of this Act. This is price fixing pure and simple, and that it is impracticable and unworkable is self-evident to any one with knowledge of the industry. No two pictures are exactly alike. They are not comparable to other products, like, for example shoes, hardware, lumber, iron, steel or coal. The value of pictures is liot constant or static; but on the contrary, is extremely variable and no commission can fix a fair and reasonable price for a picture which will apply to all exhibitors generally. A picture is worth more to one exhibitor than to another, and vice versa, according to the type and character of both the picture and the theater. To illustrate: "Wings" is having a successful run on Broadway, but who can say what demand there will be for it in other sections of ^ the country? (Tould any commission fix a "differential" for this picture? Other outstanding examples are to be found in the pictures formerly made featuring certain stars which at one time were in great demand and commanded large prices, but on account of unforeseen accident in the short space of a few hours they became almost worthless in this country. Pictures by different stars, directors and authors vary according to their individual popularity. Also the theaters vary as to type, location, seating capacity, clientele, policy, presentation and desirability. No set rules, standards, or "differentials" can be made to apply to all pictures and all theaters. No quantity discounts for buying in large quantities can be formulated as may be done in the case of such products as iron, steel, coal, shoes, etc. You can safely contract to give buyers of shoes by carload lots a discount varying on the number of carloads bought. A pair of shoes is worth as much in Boston as in Dallas, Texas, but this cmnot be said of such a picture as "Wings." A picture is shown in the Roxy theater in New York, and also in the Circle theater in Indianapolis. Both are first-run showings, in first class, first-run downtown theaters; but the picture is worth more in New York than in Indianapolis. Inasmuch as no such fixed "differentials" could be fixed by the commission, it would necessarily follow that each case would have to be considered separately and decided according to the facts peculiar to each transaction. The effect of this would be ruinous to the industry. There are hundreds of thousands of picture contracts made each year, any of which, under the provision of this bill, could be brought before the commission for review and determination. Such a procedure would require months of time and litigation, as will be developed later herein. Such delays would be fatal to the business. Pictures must move quickly as their advertising exploitation begin long before their release and their publicity value does not last long. They must be sold and exhibited quickly or there is a resulting loss. They cannot be carried on the shelf. Newness, novelty and publicity are the very essence of their value and such a procedure as is contemplated by this legislation would operate unfairly not only to the protlucers and distributors but to the exhibitors as well. A further effect of these price fixing provisions would be to put the producer and/or distributor in the same category as public service corporations, while the Federal Trade Commission would occupy a position comparable to that of the Interstate Commerce Commission and the various state public utility commissions. The legislative regulation through comrnission of public utilities finds its justification in the fact that they are quasi public corporations which enjoy the benefits of the exercise of the right of eminent domain and are, therefore, held properly subject to public regulation in the theory that they enjoy the benefits of quasi public status and should, therefore, bear the burdens of such status. Producers and/or distributors of films, even though they be copyrighted, cannot be classed as public service corporations. There can be no distinction made between them and other manufacturers and wholesalers. The producer is a manufacturer; the distributor a wholesaler; the exhibitor a retailer, and the public, of course, is the consumer. Congress should not undertake to discriminate against this industry and seek to exercise control over it in this manner. There is no difference in the essentials and/or functions of this industry and other manufacturing industries. The only distinction that can be made is in the nature of the product and the necessary effect of this section would be to deprive the producers and distributors of their rights to choose their own customers as has been fully discussed heretofore. If this industry be singled out for governmental regulation and reconstruction as is proposed in this bill, the next session of the Congress will find factionalists from many other industries asking for similar regulation. In effect, this bill would be the first step or entering wedge of regulation and reconstruction by the Government of all manufacturing industries. The exhibitors who are opposed to block booking in buying pictures seem to desire to pick and choose where they please at their own price. There is absolutely no mechanical differential price system under which this industry can live. The minute you fix the maximum that a picture can take in, — and that is exactly what this system would result in, you retard for all time the ambition and the reward that come with trying the unusual. You discourage the greatest thing back of the production end of this industry, and that is the incentive for larger grosses and larger returns which are necessary to bring to the screen such pictures as "The King of Kings,' "Ben-Hur," "The Covered Wagon," "What Price Glory," "Robin Hood," "The Sea Beast," "The Patent Leather Kid." "Keeper of the Bees," "Hunchback of Notre Dame," etc. Right here is where the public become? an interested party. Not only would the members of the industry lose all of the savings that they should be able to get from chain operation, but they would have a situation more chaotic and more costly than ever before presented in this business, and these fundamental facts certain people absolutely refuse to see. It must not be forgotten that in the past, when there were two or more theaters in competition, it often resulted in the exhibitors getting together and doing the price fixing themselves. The producer-distributor-exhibitor corporations can cite many concrete examples where this has been done: that not only the niaximvim pi ice was fixed, but the service was absolutely allocated, and an understanding existed as to which pictures a certain exhibitor would bid on and which he would leave alone. Such an unstable market as is proposed could not and would not last, and it would not be long before these unaffiliated exhibitors would want to tie-in competition with the circuit. Individual houses would turn right around and make agreements with a circuit house, with which they were in competition, in order to control the price of their film. Not everybody who desires to be in the automobile business can have an agency for Rolls Royce; not all of them can sell Packard cars or Cadillacs. After these agencies are sold the manufacturer has secured his outlet. It may be possible for them to buy a Chevrolet or Ford or some other agency. By this token not every exhibitor can have United Artists, First National. Fox, etcetera, and just the same as there are varying degrees of quality in merchandise in other lines, so does the same thing exist in the selling of motion pictures. But on top of that, even if this condition was established and the better pictures were to be distributed among everybody who desires them, they still will want to pick and choose from these better pictures with a fixed differential in their own favor. When a producer offers a block of pictures to an exhibitor and states that he wants a complete sale or none at all, the exhibitors can refuse to buy that way, if he does not desire to do so. Nobody argues sensibly any more that any one brand of pictures in this industry is necessary to an exhibitor. If he does not like the selling plan of, for example, Paraniouiit-Famous-Lasky Corp.. at the INDUSTRY HELD BUILT ON BLOCK BOOKING BASIS price quoted, he can buy some other brand of merchandise, and there are too many successful brands on the market today to any longer dispute the old idea that an exhibitor had to have certain pictures in order to live. The industry has at the present time ■ serious over-production situation. There are many more pictures being made than the country can consume. This is the situation that the exhibitor knows exists and is at the present time taking advantage of. When the prices get too high, he changes his source of supply; when the quality is not right, he does the same thing. All of these considerations are very pertinent to the man who is making and selling motion pictures. There are many exhibitors that producers purposely lose as customers because of the type of exploitation management they represent. It is not true that the producers always sell to the highest bidder. It would not be healthy if they did. This industry has prospered and grown as rapidly as that of any other industry that has come to our attention. Up to only five years ago. practically no money from the public was taken in by producers from the theater end of this business. The industry had expanded and it had been built out of profits. The entire basis of this prosperity and this growth was the same block-booking or wholesaling plan by which exhibitors purchased their pictures, the same as they would buy one thousand suits of clothes from Hart, Schafner & Marx, with confidence in the manufacturer as a great asset. There are many exhibitors who have "picked pictures and gone broke." The man who asserts he can always tell what his audience wants is nothing short of foolish. The wisest men in this country, with years of experience and millions involved, have gone wrong and repeatedly gone wrong in trying to guess what the public requires. The individual who sets himself up as such a judge is automatically making the claim that he personally possesses a greater knowledge or insight into the public taste than all the combined brains of the industry, who are constantly striving to figure out what the public wants. True, some have guessed where, for instance, western pictures are not going at all — and made other guesses where certain types of pictures do not go over, but in the main, no exhibitor has been able to successfully guess the tastes of the audience, and do it consistently. Big exhibitor ventures have been made on the basis of tying up with the output of reputable manufacturers, who made quality productions on the one hand, as against those exhibitors who have made just as much money by running an entirely different kind of business, who use a cheaper grade of pictures, under a different policy, and who have progresse<l just as satisfactorily. Section 5 — Page 9 — Line 9-18 Section 5. After eighteen months from the date of this Act it shall be unlawful for any producer or distributor of motion-picture films, in the current of interstate commerce, to make or enter into any contract, agreement, or arrangement for the leasing of any film or films for exhibition to the public, unless such copyrighted film or films hai'e been completed and are available for immediate release and without first affording the exhibitor desiring to least such film or films an opportunity to view a projection of such film or films upon a screen if he so desires. The provisions of this section would make it unlawful for a producer and/or distributor to make and/or contract for the sale of copyrighted films unless the same have been completed and are available for immediate release and to refuse exhibitors a preview. Here again is an extraordinary discrimination against this industry. In no other line of commerce is the manufacturer prohibited from making sales for the future delivery of his product. The United States Steel Co.