Harrison's Reports (1954)

Entered as s«cond-<dass matter January 4, 1921, at the post oSce at New York, New York, under the act of March 3, M79. Harrison’S Reports Yearly Subscription Rates: 1270 SIXTH AVENUE United States fl6.00 U. S. Insular Possessions. 16.50 Canada 16.50 Mexico, Cuba, Spain 16.60 Great Britain 17.50 Australia, New Zealand, India, Europe, Asia .... 17.60 36c a Copy New York 20, N. Y. A Motion Picture Reviewing Service Devoted Chiefly to the Interests of the Exhibitors Its Editorial Policy: No Problem Too Big for Its Editorial Columns, if It is to Benefit the Exhibitor. Published Weekly by Harrison’s Reports, Inc., Publisher P. S. HARRISON, Editor Established July 1, 1919 Circle 7-4622 A REVIEWING SERVICE FREE FROM THE INFLUENCE OF FILM ADVERTISING V^X^VI SATURDAV^J^UARY 9, 1954 ~ No. 2 THE CREST CASE In a 7'1 decision handed down on Monday of this week, the U.S. Supreme Court ruled that, in the absence of any conspiracy to violate the anti'trust laws, the major distributors have the right to deny first'run films to neighborhood theatres and to restrict such runs to downtown theatres that have greater revenue’ possibilities. The Court’s ruling was contained in a decision against the Crest Theatre, located about six miles from downtown Baltimore, which contended that the eight major distributors had violated the anti'trust laws by denying it first'run pictures and by conspir' ing to limit such pictures to downtown Baltimore theatres. When tried in the District Court, a jury had de' cided against the Crest Theatre and, after this deci' sion had been sustained by the Fourth Circuit Court, the Crest had appealed to the Supreme Court. The Court’s opinion, written by Associate Justice Tom Clark, states in effect that the mere proof of parallel action — that is, proof that all the distributors reached the same business decisions, is not enough to establish an anti'trust violation, and that suing theatres must establish that the parallel behavior was the result of conspiratorial action and not of independent judgment in solving a common business problem. Clark’s opinion pointed out that the distributors gave similar reasons for denying first'run films to the Crest, and that ail argued that the Crest was not en' tMed to day'an^'^e first' runs because* it was in adtJgfSKl^cxinTp^'tM ‘Cfife even thoagh it is a neighborhood house. He added that, even if the distributors were willing to license first'run pictures to the Crest, no downtown theatre would waive its clearance rights to permit the Crest to get day'and'date showings. Clark then pointed out that if the Crest were to get first'run pictures the hcense would have to be for exclusive showings. “However,” he added, “an exclusive license would be economically unsound because the Crest is a subuT' ban theatre located in a small shopping center and served by limited transportation facilities,” and with a drawing area of less than one'tenth that of a down' town theatre, it cannot compare with those easily accessible theatres in the power to draw patrons. Hence, the downtown theatres offer far greater op' portunities for the widespread advertisement and ex' ploitation of newly released features, which is thought necessary to maximize the over'all return from subse' quent runs as well as first runs.” “The crucial question, ” said Clark, “is whether respondents’ conduct toward petitioner stemmed from independent decision or from an agreement, tacit or expressed. To be sure, business behavior is admissible circumstantial evidence from which the fact finder may infer agreement. But this Court has never held that proof of parallel business behavior conclusively establishes agreement, or, phrased such behavior itself constitutes a ShernSim'Act offense?’ Circumstantial evidence of consciously parallel lae-^ havior may have made heavy inroads into Ae'tiSidi'-^ tional judicial attitude toward conspiracy, but ‘con' scious parallelism’ has not yet read conspiracy out of the Sherman Act entirely.” Although it is apparent that the Court’s decision in this case is a major victory for the distributors, both Abram F. Myers, National Allied’s general counsel and board chairman, and Herman M. Levy, general counsel of the Theatre Owners of America, were quick to warn the distributors against utilizing the decision to resume discriminatory practices against independent exhibitors. In a formal statement wired to the trade press im' mediately after the decision was handed down, Mr. Myers had this to say; “Decision in Crest Theatre Case upholds position outlined in my speech at Allied’s Pittsburgh Conven' tion, October 3, 1950 and thereafter unsuccessfully urged upon the film companies by an Allied com' mittee that, in the absence of collusion or conspiracy, film companies may safely select their customers for sound business reasons and it is not necessary for them to institute bidding for their pjqjtection. the oot c^^igp^.sujtate, I think that the rest of Allied’s contencba ;^llows as a _ corollary that bidding is essential oiil^V’oen an inde' pendent e^ibitor demands pi^Ufs ^n a iun formerly monopolized by a circuit theatre aajd tin;, refusal to sell is a hangover of conditions coiideitoed by the Supreme Court in the Paramount casjS “However, our distributor frienlfc should not get the idea that the way has been cleared .for ^ ^resump' tion of discriminatory practices aga^lBt ind^endent exhibitors and in favor of presently or formerlf affilia' ted theatres such as were condemned in tha Para' mount case because, if they do, the daises that case will supply the necessary proof of eeBjsfiBfy:y. “The Crest decision should have the' effect to\clear the court dockets of flimsy cases involving onlT^atrallel action but cases involving overt acts of conspiracy or which button on to the Paramount case will not be affected.” Writing in a similar vein, Mr. Levy had this to say, partly, in an analysis of the decision for his member' ship: (Continued on bac\ page)