Year book of motion pictures (1951)

STATUTORY COURT DECISION IN THE NEW YORK EQUITY SUIT W, ITH DI\'ORCEMENT a reality for one of tlie theater-owning delendants at the start of the year, and scheduled to go into effect for a second major company by the end of the year, it seemed at last that the long-embattled industry antitrust suit was achieving the results intended by the Department of Justice since the filing of the action on July 20, 1938. jail. 1, 1950. marked the beginning of the end of the order as two neu' Paramount companies emerged— Paramount Pictures, headed by Barney Balaban, and United Paramount Theaters, with Leonard Goldenson as president. In addition, the new exhibition company during the vear graduall\ (li\ested itself of theater holdings in conformance with the decree, which obliges the company to trim its holdings to the 500-odd theater limit bv Jan. 1, 1952. RKO, the first of the defendants in point of time to withdraw from the litigation when it entered into a consent decree w'ith the Government early in 1949, was to have completed dixorcement and divestiture by Nov. 8 of that year. Extensions granted by the District Court, however, delayed the actual split until Dec. 30 of 1950. Effective that date, the parent company gave way to RKO Pictures and RKO Theaters, with Xed E. Depinet and Sol Schwartz, respectively, presidents of the new corporate entities. The Government ran into some difficulties early in 1951, nevertheless, when Howard Hughes, holder of a 24 per cent interest in the parent company and consequently a holder of similar interests in each of the new companies, agreed to trusteeing his stock in the exhibition corporation but balked at the Court's decision of a time limit for a sale. Hughes, through his attorney, I'om Slack, argued that the consent decree as agreed to by both parties took pains to make no mention of a forced sale of his interests in either company. The Court, however, heeding the argument of D of J .Attorney Philip Marcus, that no true divorcement was possible while Hughes kept his interest, ruled on March 27 that Hughes must sell by Feb. 20, 1953. If he should fail to dispose of the stock by the deadline, the trustee, Irving Trust Co., will be required to sell within the following two vears. While most of the other major defendants had indicated willingness to talk consent decrees, and were doing so in some degree, the U. S. District Court filed its final decrees on Feb. 8, 1950. Remaining majors were ordered to divorce and divest while a separate judgment for the Little Three made them subject to the same Findings and Conclusions of Law but placed no ban upon the future acquisition by them of theaters and improved their position with regard to treble-damage antitrust suits. At the close of the year, counsel for Warner Bros, and the D of J came to agreement on a consent judgment for that major defendant. Under terms of the agreement, released by the D of J on Dec. 26, Warners will divest itself of at least 54 theaters within two years, half of which must be divested after the first year. Moreover, within 27 months from the entry of judgment, two new wholly independent companies must be in operation, effecting a split of exhibition and distribution-production interests. Remaining major defendants, 20th-F()\ and Loew's, are reported very close to consent agreements, but negotiations have not been com Dieted. FINDING OF FACT' This action having: been duly tried and the proofs and arruments of the respective parties having been duly heard and considered, this court, having filed its opinions herein dated June 11. 1946. and July 25, 1949, does hereby find and decide as follows: 1. The following: are definitions of terms used in these finding:s and in the judg-ment to be entered hereon : Block-booking — The practice of licensing-, or offering for license, one feature, or group of * Unless otherwise stated these findings show the situation in 1945. features, upon condition that the exhibitor shall also license another feature or g-roup of features released by the distributor during a given period. Clearance — The period of time, usually stipulated in license contracts, which must elapse between runs of the same feature within a particul-ar area or in specified theatres. Exchange District — An area in which an ofBce is maintained by a distributor for the purpose of soliciting license agreements for the exhibition of its pictures in theatres situated throughout the territory served by the exchange and for the physical distribution of such films throughout this territory. 907