The film daily year book of motion pictures (1941)

Fox Film Corporation and their subsidiary and .iRiliated companies. United Artists Corporation, Universal Pictures Co., Inc. and Columbia Pictures Corporation, three otlier companies named in the original complaint, liave not joined in the decree. An open hearing will be held before the Honorable Henry W. Goddard. District Judge, on November 14, 1940, at 10:30 A. M., at which time interested persons not parties to the suit will be given an opportunity to present their views with respect to the proposed decree. In addition to revising selling practices of the five signatory companies, the decree sets up a system for the arbitration of disputes between exhibitors and distributors to be administered by the American Arbitration Association. In order to give this arbitration system a fair trial, the government agrees not to seek divorcement or dissolution of production and distribution in the industry for a period of three years. During this period the signatory companies agree not to engage in any general program of expansion of theatre holdings and to maintain the status quo so far as is practicable. Practices Affected by the Decree Blind Selling and Blind Booking The decree strikes at two selling practices in the motion picture industry which have long been under attack by exhibitor organizations, as well as parentteacher associations and other public groups, i.e., block booking and blind selling. Various proposals to eliminate these practices have been suggested from time to time and legislation to that end has been under consideration by Congress. Under the present practice, at the start of each motion picture season an entire year's supply of pictures is sold at one time. The contract is executed before production has started on the majority of pictures covered by it. An exhibitor must rely on what is at best but a sketchy outline of the pictures the distributor intends to produce. This selling practice is commonly known as blind selling. Not infrequently the completed picture differs materially, with respect to story, cast of characters and quality, from the outline previously presented to the exhibitor. As a result, an exhibitor often finds himself in a position where he must play a picture which he would never have licensed if he had seen it. Trade Showing Blind selling is prohibited by the decree. Pictures must be completed and exhibited to the trade before they can be sold or offered for sale. The defendant companies are re(|uired to trade show their pictures in each of their respective exchange districts. Thus every exhibitor is given an opportunity to see the pictures before he buys them. Under existing practice, each distributor tries to sell as many pictures at one time as it possibly can and requires exhibitors to contract for all or substantially all of the season's output in order to get any of its pictures. As many as fifty pictures may be included in a single block. This is the practice that is known as block booking'. As a result of this practice, exhibitors have practically no opportunity to select pictures based on the local tastes of the communities which they serve. In addition, the playing time of theatres is filled by pictures bought in large blocks from the defendant companies and exhibitors have little screen time available for showing the product of independent producers. Selling in Blocks of Five The decree prohibits the licensing of more than five pictures in a single group. It does not prohibit the licensing of less than five pictures in a single group; distributors are free to sell pictures one at a time or in groups of two, three or four. Although distributors may sell more than one group of five pictures at a time, they may not condition the sale of one group of pictures on the sale of another picture or group of pictures. Under the method of selling prescribed by the decree, if an exhibitor finds that a particular group of pictures contains some that are objectionable, he can rc'iuest that these pictures be eliminated or that other pictures be substituted for them. If the distributor refuse to grant his request, the exhibitor is in a position to reject the group without jeopardizing his entire year's supply of films. The decree neither requires distributors to grant nor prohibits them from granting to exhibitors the privilege of cancelling one or more pictures in a given group. As a result of the process of bargaining between distributors and exhibitors, cancellation privileges in varying degrees have been granted by distributors in the past though they have not been legally required to do so. Under the decree the parties are free to bargain with respect to cancellation as well as with respect to the particular pictures to be included in a given group. Offensive Pictures Exhibitors are given the right to cancel any picture that is locally offensive on moral, religious or racial grounds. liecause pictures to be released during the present selling season have already been contracted for, the provisions of the decree with respect to trade showing and sales in small blocks do not become effective until the opening of the new selling season on September 1, 1941. Benefits to be Anticipated It is reasonably to be expected that the provisions of the decree as to trade showing and sales in small groups will result in an improvement in the quality of pictures as well as in greater opportunity for local community tastes to be reflected in the pictures selected by exhibitors. This new method of selling should open to independent producers a market now closed to them under the system of season block booking. In addition, exhibitors will have greater and more frequent opportunities to compete for pictures. Although the method of selling provided for in the decree is new and untried in the motion picture industry, it is believed that it will be of benefit to exhibitors and distributors, as well as to the public. Whether or not the new method of selling will operate effectively can only be determined after a fair trial and that is provided for by the decree. Alleged Unfair Trade Practices The suit charged that the defendants had engaged in certain unfair and discriminatory trade practices to the detriment of independent exhibitors. Among these practices were the following : (1) Granting certain theaters unreasonable clearance over other theaters ; (2) Discriminating in favor of large circuits of theaters and against small independent exhibitors by licensing pictures on preferred runs to the circuit theaters ; (i) Refusing to license pictures at all to certain theaters ; (4) Forcing exhibitors to buy short subjects, newsreels, trailers, serials, reissues or westerns as a condition of licensing feature pictures; (5) Arbitrarily withholding available prints for the purpose of giving a competitive advantage to certain exhibitors over others. Arbitration of Disputes To provide a forum for the settlement of complaints with respect to the trade practices described above, the decree sets up a system for the arbitration of disputes between exhibitors and distributors. In this respect, the decree is unique. Its approach to the solution of the problems existing in the industry differs from that of any consent decree heretofore entered pursuant to the provisions of the anti-trust laws. Instead of merely prohibiting certain practices and leaving enforcement to the ordinary process of contempt proceedings instituted by the Government, the decree provides a forum in which exhibitors are given an opportunity to have their complaints promptly heard and promptly decided independently of any action by the Government. 639