Harrison's Reports (1939)

.52 HARRISON'S REPORTS April 1, 1939 It is to make it impossible for a wholesaler to hold the business-life of his own customers in the hollow of his hand by competing with them that every one of you must fight to bring about a divorcement of theatres from productiondistribution. By the suit now pending in the District Court for the Southern District of New York, the United States Government has undertaken to bring about such a divorcement. But in order for it to do so, it must have the necessary proof. The defendants have demanded of the Government a Bill of Particulars, and the Court has granted part of their demands. The Department of Justice is naturally preparing this Bill. But in order that the Government's case may be strengthened, the Department of Justice must have plentiful information as to the abuses the producers have practiced on you over a period of years, and as to the effect upon the independent theatre owners the operation of theatres by the major companies has had. Such information can be furnished only by you, the independent theatre owners. There has never been a time when you had a better chance to shatter the chains that have bound you for so many years. The United States Government has undertaken, without any cost to you, to free you from this slavery. Will you take advantage of the Government's proffer? Will you furnish it with the necessary information? If you do not, it will be said that you are worthy of no more than your present fate. If you wish to cooperate with the U. S. Government in this suit, write to Hon. Thurman Arnold, Assistant Attorney-General, Department of Justice, Washington, D. C, giving him whatever information you have, not only concerning yourself, but also other exhibitors. THE SPEECH ALLIED PRESIDENT COLE MADE AT THE MGM SALES CONVENTION (Concluded from last week) (The first part of the speech was published in last week's issue. — The Editor.) "A seller dealing with a buyer in that helpless situation owes a duty to the industry, to society and to the law not to press him so hard as to deprive him of a means of livelihood. The motion picture business is not a public utility, its prices and terms are not regulated by law ; but the arbitrary exercise of monopolistic power is what has caused other industries to be classified as public utilities. Therefore, a sense of responsibility to the public in general, as well as an enlightened self-interest, should admonish a distributor not to drive too hard a bargain simply because an exhibitor must have his pictures. Now more than ever before it is to the interest of the distributors to keep the exhibitors in business ; not to force them out. And if you say that there is no substance to this admonition, I will respond by asking you for just a moment to put yourself in the exhibitors' shoes. Knowing that the week-end business equals 80% of your total for the week, how would you like to have to play designated high percentage pictures on every week-end against the competition of radio programs featuring movie stars, some of whom may be featured in the pictures you must play ? "Not only must the distributors exercise some restraint in the matter of draining off theatre earnings, unless they want to kill the goose that lays the shiny eggs, but they must preserve the right of the exhibitor to bargain in respect of terms and conditions that greatly affect his earning power. The buyer — and here I speak for the subsequent-run exhibitor— must be free to make his contract with the seller unhindered by terms and conditions imposed by third persons who are not parties to the transaction. The crudest concepts of individual freedom imply this. And now the highest court in the land has laid down that very principle for the guidance of this industry. Like it or not, it is the law. For my part, I should think you would like it. Countless exhibitors have told me that they got along all right with the film salesmen and exchange managers; that the latter were anxious to grant them better terms than they were receiving ; that their hands were tied and their policy was dictated by the large buyers who insisted on writing their terms into the contracts between the distributors and the subsequent runs. "Let us apply this principle to the very important matter of protection — 'clearance' to you. I need not remind you how much importance exhibitors attach to protection. The right to impose protection resides with the distributors by virtue of their ownership of copyrights. To the extent that the imposition of protection enables the distributor to reap a maximum return on its product, it is justified. But the distributors allowed this valuable privilege to slip out of their grasp. By the time the Supreme Court got around to setting matters right, control of protection had been usurped by the circuits, which, as the court pointed out, owned no copyrights. In virtually every territory the dominant circuit decides for itself what protection it wants and its terms are written into the contracts of the independent subsequent runs, however distasteful, however ruinous, it may be. I do not believe there is a man within range of my voice who thinks that a sound condition. "Protection imposed under those conditions has no relation to the protection of the copyrights owned by the distributors. It ignores the rights which the distributor has in its copyrighted properties. The only purpose of such protection is to regulate competition between exhibitors in the interest of the circuits and to give the circuits a monopoly in their respective territories. The distributors now have it in their power to re-assert their own rights, to regain the control over their own products which they had lost, and to regulate clearance solely in their own interest as distributors. If they grasp this opportunity great progress will have been made. If instead of taking matters into their own hands, they allow their theatre departments and large customers to devise means for perpetuating the old order, not only are they headed for serious trouble, but they will be guilty of fumbling the greatest opportunity to put the industry on a sound basis that they have ever had. "I am sure that every man in this room realizes that the undue extension of protection not only cripples the theatres burdened by it, drying them up as sources of film revenue, but also tends strongly to alienate the good will and sacrifice the patronage of millions of theatre goers. The greatest fallacy foisted on the industry by the theatre departments and the chains is that if a picture can be withheld from the subsequent run theatre long enough, the patrons of that theatre will flock to another theatre, inconveniently located and charging a higher admission price, in order to see that picture. This ignores the plain fact that many people are dependent on a particular theatre because they are too old or too young to go down tow^n or to another town, or because they can not afford to attend the higher price theatres, or have not cars or do not care to drive to the other theatre and find parking space. These people are not forced into the prior runs because the theatre they are accustomed to attend — or can attend — can not show a picture when they would like to see it. They merely lose interest in the picture. "I am not unmindful that some prior runs might be seriously impaired or destroyed if the low price subsequent runs got the picture too soon. Naturally, it is the concern of the distributors that those runs be preserved, just as it should be their concern that the subsequent runs be preserved. But let the distributors decide protection schedules for themselves, as the result of negotiations with all affected thereby, and in the interest of all concerned. When the present outrageous schedules imposed by the circuits in some territories are moderated, I am confident that theatre attendance will increase and that the distributors will not suffer, but on the contrary will prosper, as a result thereof. "And in closing, I point out to you the desirability from every point of view of retaining the independent exhibitors in this industry. The industry needs these men and their ideas, energies and good will in selling motion pictures to the public. A monopolized industry is never a healthy one, and it knows no peace. The motion picture industry has weathered the depression, but now it has come upon evil days. It must not only repent and mend its ways, but it must also do a certain amount of penance. Readjustments must be made, new policies must be adopted, new trade practices must be put into effect and all these must be enduring, not transitory. If the lesson has been learned, if there is a sincere desire to accommodate the industry to the new order, all will be well. If there is a grudging acceptance of the situation, if the dogs of reaction continue to snap at the heels of progress, then the industry and all connected with it are in for a long siege of uncertainty and demoralization. "If such dire consequences ensue, it will not be until after a record has been made, a record which all may read and understand. Every person in this business, whether he be a producer, a distributor, or an exhibitor, or whether he be affiliated or independent, is helping to write that record. This carries with it a terrible responsibility to meet the issues of the day fairly and fully. I am both an optimist and a patient man. I know that it is only natural to strain and gag at a bitter pill. But since the doctor has ordered it, sooner or later it must be swallowed, and I am convinced it will do the industry a lot of good. I, for one, am not selling the motion picture business short."