Harrison's Reports (1951)

56 HARRISON’S REPORTS April 7, 1951 the Commission and claim that the movie companies are flouting the Commission's policy. “Then the Commission will either have to back down on its policy, or start fixing the price of film. “Commission Would Destroy Government’s Revenue “The country is engaged in a mighty preparedness campaign, the object of which is to insure peace. The Congress is confronted with the task of imposing additional taxes to sustain the effort. “Although the motion picture business is currently in a serious slump, due in some measure to the free entertainment afforded by television, the United States Government still collects a 20% tax on every paid admission to a motion picture theatre. “These admission taxes collected from movie patrons amount to about $300,000,000 a year. “Yet the Federal Communications Commission by its declared policy of building up television at the expense of the movies would jeopardise, certainly greatly reduce and possibly destroy this valuable source of revenue. “This grave consequence, evidently not realized or taken into account by the Commission, illustrates the danger of adopting policies affecting industries which are not subject to the Commission's jurisdiction without a full, complete and open investigation in the course of which information of all angles of the subject is obtained from those most affected and best equipped to furnish it. “Unless the Commission recedes from its position, this phase of the matter should receive the attention of Congress while the tax bill is under consideration. “And It May Still Be All for Naught “The gratuitous nature of the Commission’s dictum, and the fact that compliance therewith still will not guarantee any film company a broadcasting license, is one of the most serious aspects of its action. “The greater part of the report deals with the points which were set down for hearing. That part of the report was within the Commission’s authority and we have no special fault to find with the conclusions reached. It is true, as the Commission says, that 'the major motion picture com« panies . . . have violated the anti-trust laws over a period of years in the motion picture field.' We think it follows, as the Commission concludes, that such violations are “a matter that the Commission must consider carefully in determining the qualifications of these companies to operate in the public interest.’ “That is an issue between the film companies and the Commission in which the independent exhibitors have no direct interest. It is a question which will have to be resolved on a case-to-case basis when and if those companies apply for licenses. “The only phase of the report that affects the theatre owners — and it threatens their very existence — is the next to the last paragraph therein which says that the motion picture companies must make their best films, performers and stories available to television in order to be eligible for a license. “Because it is alien to the questions set down for hearing and does not even deal with adjudged violations of law, it seems to have been added as an irrelevant afterthought. The Commission is careful to say, 'We express no opinion at this time as to whether such practices (not supplying films, etc., to TV) are or are not in violation of the anti-trust laws.’ So far as we are aware, no law provides and no court has ever held that it is a violation of law for a private corporation, acting alone and not in concert with others, to choose its own customers. And yet the whole purpose of the proceeding was to determine the weight to be given law violations in the granting of licenses. “To reduce the Commission’s position to complete absurdity, let us suppose that a motion picture company has attempted in good faith to comply with the Commission’s policy; has made its best films available to TV and thus destroyed their value for exhibition in the theatres. It has destroyed one vast market in hopes of gaining another. And then the Commission, applying the principles discussed in the first six and a half pages of its report, decides that it cannot grant a license to that film company because of its antecedent violations in the motion picture field! “Mowing Down the Innocent Bystander* “The report gives the impression that the Commission moved by some undisclosed impulse hurled a rock at the film companies; but it struck the exhibitors. “It might at least have given consideration to the extent of the havoc which its policies, if carried out, will wreak among the motion picture exhibitors. “When a picture is shown on television its boxoffice value in the area in which it is shown is destroyed. About 17,000 theatres are dependent upon an adequate supply of boxoffice attractions. Of the $2,700,000,000.00 invested in the entire industry, only $160,000,000.00 is invested in production and distribution. All the remainder (94%) is invested in theatres. The 1940 Census shows that 177,420 were employed in the motion picture industry. Of these, 33,687 were engaged in production; 11,332 in distribution and 132,401 in exhibition. “Thus the Federal Communications Commission, of its own motion, has laid down a policy which, if carried out, would endanger the more than two billion dollars invested in theatres and threaten the livelihood of many. The rule prescribed by Congress for the granting of licenses is that 'the public convenience, interest, or necessity will be served.' Certainly Congress never contemplated that the public interest could be served by tearing down an established industry in order to help a rival industry which, once the novelty has worn off, may not retain public favor. “Despite all the hullabaloo television's future is still clouded with uncertainty. Its forward surge has slowed down to a walk. Those who glibly predict that television will supplant the movies should read the feature story in The Wall Street Journal for March 26, 1951, entitled, 'Teetering TV.’ The Communications Commission may wake up some day and find it has backed the wrong horse. In the meantime, grave damage may result from its present policies. They call for stern resistance by the motion picture industry, the theatres as well as the producers.’’ Among other industry leaders who have attacked the FCC statement of policy is Harry Brandt, president of the Independent Theatre Owners Association, who said that the Commission “is attempting to blackjack the motion picture industry into committing hari-kari.’’ The FCC action was condemned also by Senator Alexi ander Wiley (R., Wis.), who labelled it a “gratuitous attack" against the industry. In a letter to Wayne Coy, the FCC chairman, Senator Wiley said that the FCC had “stepped out of bounds as a quasi-judicial body,’’ and that “neither the FCC nor any other Federal commission operating under the administrative procedure act should pre-judge a case until there has been a hearing, notice of the issues, presentation of evidence and arrival at a decision. I do not feel that the FCC should intimidate or coerce the motion picture industry or any other industry. An indictment without hearings amounts to such intimidation.” Still another to defend the industry is the 7<lew Tor\ Times, which stated on its editorial page this week that the FCC had “overreached itself,” and that its statement of policy “is an arbitrary and capricious action that flouts the elementary principles of a competitive economy and raises serious questions of law.” The FCC is apparently unconcerned, added the Times, “whether Hollywood goes broke in serving as the involuntary sugar daddy of television.” As any one can judge from a reading of Mr. Myers’ analysis and the other comments, the FCC's coercive action is one that must be resisted by the entire industry in no uncertain terms. The industry’s responsible leaders, both in production-distribution and exhibition, should make immediate plans to combat the FCC’s unrealistic statement of policy to the end that it will reconsider its action. Failing that, our leaders should seek Congressional aid. If ever a strong COMPO was needed, now is the time.