Harrison's Reports (1939)

Entered as second-class matter January 4, 1921, at the post offloe at New York, New York, under the act of March 3, 1879. 'S Yearly Subscription Rates: 1270 SIXTH AVENUE Published Weekly by United States $15.00 D(Wlm 1a19 Harrison's Reports, Inc., U. S. Insular Possessions. 16.50 ROOm Publisher Canada 16.50 New York, N. Y. P. S. HARRISON, Editor Mexico, Cuba, Spain 16.50 . „ .. _. . _ _ , Great Britain 15 75 A Motlon Picture Reviewing Service Australia, New Zealand, Devoted Chiefly to the Interests of the Exhibitors Established July 1, 1819 India, Europe, Asia .... 17.50 ,r„ r„„v Its Editorial Policy: No Problem Too Big for Its Editorial Circle 7-4622 aoc * ^"vy Columns, if It is to Benefit the Exhibitor. A REVIEWING SERVICE FREE FROM THE INFLUENCE OF FILM ADVERTISING Vol. XXI SATURDAY, MARCH 4, 1939 No. 9 FIGHTING A LOSING BATTLE From reports published in the trade papers, it seems certain that an application will be made to the United States Supreme Court for a re-hearing in the case of United States Z'S. Interstate Circuit et al, in which case Judge William H. Atwell, of the Federal District Court at Dallas, Texas, was sustained in holding that a monopoly existed in the distribution of films in Texas. In the opinion of Harrison's Reports, such an application will be but another vain effort on the part of the distributors to accomplish, through a weak claim of right, what could be accomplished through cooperation. As far back as June 4, 1938, this paper warned that, if the distributors should appeal to the United States Supreme Court from the findings of Judge Atwell, "all they could possibly accomplish would be to add the U. S. Supreme Court's approval to the damaging findings and decree of the Dallas District Court." Had the producers heeded at that time this paper's advice, they would have dropped the appeal and would have tried to work out with the exhibitor leaders a fair trade practices code. But they failed to heed it, and now they find themselves faced with a serious problem. Again, instead of facing the actualities, and giving a chance to the trade practices conference to find a fair way of protecting every one's interests, they have decided to resort to more court proceedings. As evidenced by the majority opinion, the U. S. Supreme Court gave the questions involved in the Interstate case deep study. The business of distributing and exhibiting pictures, particularly as it relates to the State of Texas, was gone over with a toothcomb. In the face of that opinion, it is manifest that the distributors will waste their time on a rehearing application, for Mr. Justice Stone, who delivered the majority opinion, stated the following : "It taxes credulity to believe that the several distributors would, in the circumstances, have accepted and put into operation with substantial unanimity such far-reaching changes in their business methods without some understanding that all were to join, and we reject as beyond the range of probability that it was the result of mere chance. * * * "While the District Court's finding of an agreement of the distributors among themselves is supported by the evidence, we think that in the circumstances of this case such agreement for the imposition of the restrictions upon subsequent-run exhibitors was not a prerequisite to an unlawful conspiracy. It was enough that, knowing that concerted action was contemplated and invited, the distributors gave their adherence to the scheme and participated in it. Each distributor was advised that the others were asked to participate; each knew that cooperation was essential to successful operation of the plan. They knew that the plan, if carried out, would result in a restraint of commerce, which we will presently point out, was unreasonable within the meaning of the Sherman Act, and knowing it, all participated in the plan. The evidence is persuasive that each distributor early became aware that the others had joined. With that knowledge they renewed the arrangement and carried it into effect for the two successive years. "It is elementary that an unlawful conspiracy may be and often is formed without simultaneous action or agreement on the part of the conspirators. * * * Acceptance by competitors, without previous agreement, of an invitation to participate in a plan, the necessary consequence of which, if carried out, is restraint of interstate commerce, is sufficient to establish an unlawful conspiracy under the Sherman Act. * * * "A contract between a copyright owner and one who has no copyright, restraining the competitive distribution of the copyrighted articles in the open market in order to protect the latter from the competition, can no more be valid than a like agreement between two copyright owners or patentees. * * * In either case if the contract is effective, as it was here, competition is suppressed and the possibility of its resumption precluded by force of the contract. An agreement illegal because it suppresses competition is not any less so because the competitive article is copyrighted. The fact that the restraint is made easier or more effective by making the copyright subservient to the contract does not relieve it of illegality." The rules set down by the Supreme Court are broad enough to apply to situations outside of Texas and to aspects of distribution other than the fixing of minimum admission prices for subsequent-run houses, and the prohibition against double features. It may, in fact, extend to every phase of protection and clearance. That such a ruling would some day have been made by the U. S. Supreme Court has been predicted by Harrison's Reports a long time ago. It now makes to the distributors the suggestion that they sit down with the exhibitors, as business men, to work out for the entire industry a fair and equitable program. They should put an end to their attempts to hold on to the unfair control of the industry they have been having for many years and should endeavor to gain the good will of their customers. Unless they do so, further restrictions of their control powers are inevitable. They are continuing to fight a battle that is already lost to them. MORE ABOUT NORTH DAKOTA REPEAL In its February 18 issue, Harrison's Reports quoted the leaders of the North Dakota Legislature as having stated that the circumstances under which the theatre divorcement law had been passed seemed "peculiar," and suggested that "the end of the story has not yet been told," — that "the last word on the North Dakota divorcement law may not have been spoken yet." Since that time there have been many repercussions resulting from the "peculiar" circumstances under which this law had been repealed. Governor Moses, of North Dakota, has signed the repeal measure, thus taking off the statute books of North Dakota the divorcement law, making it almost a certainty that the United States Supreme Court would be compelled to dismiss the pending appeal from the adjudication of the United States Circuit Court of Appeals that the law was constitutional. One of the more significant repercussions is the investigation by the Department of Justice of the circumstances surrounding the repeal. According to Boxoffice, U. S. Government agents were in Bismark investigating the facts that led to the repeal of that law. The February 21 issue of Film Daily, too, states the same thing ; it says : (Continued on last page)