Harrison's Reports (1951)

80 HARRISON’S REPORTS May 19, 1951 THE COMPETITIVE BIDDING PROBLEM ( Editor’s J^ote: Because the vexing problem of competitive bidding is of interest to most exhibitors, Harrison’s Reports is herewith reproducing in full the comments made on the subject by Herman M. Levy, General Counsel of the Theatre Owners of America, at the convention of the Motion Picture Theatre Owners and Operators of Georgia, held this wee\ in Atlanta, Ga.J As you well know by now, the U. S. Statutory Court, in the case of U. S. vs. Paramount, et als., decreed competitive bidding as an alternative to divorcement. On appeal, the U. S. Supreme Court discarded competitive bidding, principally: 1 . because it did not feel it was a valid alternative to divorcement; 2. because it felt that the system would involve the judiciary deeply in the daily operation of the industry; and 3. because it looked with disfavor on the “uncontrolled discretion” of the distributors which the system would give them. Placing the management of competitive bidding in the hands of the distributors, stated the Supreme Court, could be done only “with the greatest reluctance” and “. . . real danger seems to us to lie in the opportunities the system affords the exhibitor-defendants and the other large operators to strengthen their hold in the industry.” As exhibitors, you are primarily concerned with the third reason above expressed. The fear of the Supreme Court about placing such “uncontrolled discretion” in the hands of the distributors appears to have been well founded. The distributors today possess more “uncontrolled discretion” than ever before. This is very dangerous in the hands of people who, for the most part, have been displaying a lack of responsibility, and an indifference to the problems created by that lack of responsibility. This shortsightedness and unsound position can be and must be remedied by distribution alone if the backbone of this industry, the independent theatre owner, is to survive. I mention this at this time because much of what is wrong today springs from the distributors’ unbridled use of competitive bidding, but there are other keen problems that confront exhibition today, such as: the arbitrary determination on a national level of what prices shall be paid for film, without regard to the exhibitors’ ability to pay those prices and still earn a fair return for themselves; the scarcity of product that has been created by distribution and the consequent increase in rentals; and others. It was heartening to read in the trade press last week that a major distributor has decided to do something about those exhibitors who are in need of help. Let us return to competitive bidding: after the objections stated by the U. S. Supreme Court, and by attorneys for exhibitor trade associations, and by most exhibitors, it was hoped that distribution would confine the use of competitive bidding to those instances where it was absolutely required. That, however, has not been the case. Competitive bidding is being used more today than ever before. And, for the most part, without specific requests therefor by exhibitors. It seems that with some of the companies, the receipt of a letter from an exhibitor requesting a run he does not then have is a signal for the automatic plunging of the area into competitive bidding. This is done with a total disregard of whether it is necessary and of the privilege of the distributor to select his own customer. I am, therefore, in spite of the protestations of some of the companies to the contrary, compelled to come to the conclusion that competitive bidding has been and is being employed by distribution unnecessarily and unwarrantedly; and to a large degree, for the purpose of obtaining increased film rental. It has come to my attention from a most authoritative source that in the Los Angeles area, where there is considerable competitive bidding, one major distributor grossed substantially more in the year 1950 than it did in the prior year although it serviced only % of its 1949 accounts in 1950. The claim of some distributor spokesmen that competitive bidding is being employed only to avoid litigation is not based on facts. No one industry factor within my memory has created more exhibitor-distributor ill-will and bitterness. I find it almost everywhere as I travel the country over. You, here, are fortunate the plague has not struck in the same degree as elsewhere. Before it has a chance to raise havoc it is hoped that distribution will realize the error of its ways and the unsoundness of its position. Why does not distribution come forward, pay heed to the chaos that competitive bidding has created and take the position that it will hereafter call it into use only as originally intended, to wit, when necessary, among theatres in the same competitive area and then only when definitely requested by one or more exhibitors? That would lift from exhibition the mantle of distrust and bitterness that the unwarranted and injudicious use of competitive bidding has created, and will still preserve it for those comparatively few exhibitors who wish it. GIVING CREDIT WHERE CREDIT IS DUE Commenting on William F. Rodgers’ instructions to the MGM sales force to give relief to exhibitors who are in need of help. Jack Kirsch, president of Allied Theatres of Illinois, has complimented Mr. Rodgers for his “wise approach to help stem the growing trend of theatre closings.” In a letter to Rodgers, Mr. Kirsch had this to say: “Your latest statement is, to my mind, one of the most encouraging and constructive moves to come forward from anyone in distribution. “Of course, Bill, this statement coming from you is no surprise to me, because I have always admired your ability as a practical business man and as such you are always one of the first to face realities. “It is a certainty that the exhibitors are in serious difficulties today and other distributors could help give them a much needed ‘shot in the arm’ if they all followed your wise approach to help stem the growing trend of theatre closings.” As one of the country’s prominent exhibitor leaders who, throughout the years, has battled distribution militantly for the betterment of the independent exhibitor, Jack Kirsch is to be congratulated for his fairness in promptly recognizing publicly Bill Rodgers’ sincere desire to be of help to exhibitors in distress. Other exhibitor leaders would do well to follow Kirsch’s lead in openly commending a distribution executive who not only recognizes that many exhibitors need aid but does something positive about it.