Harrison's Reports (1945)

172 HARRISON'S REPORTS October 27, 1945 of them can be classed among the top fifty in the country, and most of them are small-town and subsequent-run houses? Moreover, it will be recalled that, during his battle with the TSD Circuit, Goldwyn, in an outburst of patriotic fervor, said the following in a statement to the press: "Because of the monopolies existing throughout the country, the boys, when they return from the war, will practically be prohibited from entering into exhibition of motion pictures. They cannot build or occupy theatres in opposition to circuits or pooled situations without the consent of existing owners or operators, as no product of consequence will be available to them. Tentatively, Congress passed the so-called G. I. Bill of Rights, but no mention was made of the right to a free and open market to them for the exhibition of motion pictures." Surely, a man of Sam Goldwyn's experience in this business realizes that, no matter how many soldiers may decide to enter exhibition, the largest percentage by far, possibly 99 per cent of them, will enter it as subsequent-run exhibitors, and, of the remaining one per cent, few if any will build or operate theatres that will rate among the top fifty in the country. Yet, Goldwyn, the very man whose heart bled for the returning G.I.'s, would now be willing to confine his pictures to the top fifty theatres, and thus deny to these same G.I.'s the "free and open market," and the "product of consequence," to which he had said, they were entitled. It is difficult to understand Goldwyn's motive in assuming a disdainful attitude towards subsequent-run exhibitors, for the revenue derived from them is, as a general rule, a most important part of a picture's final gross, often the difference between success and failure. Perhaps Goldwyn thinks that a scornful attitude towards these exhibitors may frighten them into submitting to his notoriously high rental terms. Perhaps he wants to see how much he can reduce the sales resistance of the subsequent-runs by announcing that he is not solicitous of their playing time. It's a new approach, but not a good one. There seems to be little doubt that Goldwyn's oft-expressed scorn for the smaller exhibitors stems from their continuous complaints against his excessive rental demands. But these complaints seem to be justified in view of the fact that even the big affiliated circuits, as well as large independent circuits, are constantly battling with Goldwyn over terms, often compelling him to sell away to a competitor. It is Goldwyn's prerogative to obtain as high a price as he can for his pictures. In doing so, however, he should bear in mind that, though some of his pictures may be capable of drawing capacity audiences, this fact alone does not warrant an unusually high film rental. The exhibitor does not operate his theatre all year around for the privilege of playing one or two Goldwyn pictures for a few days. During the course of a year, an exhibitor suffers many cuts in attendance due to a number of circumstances, particularly the weather. Often a good picture, possibly a Goldwyn picture, to which the exhibitor had given his best playing time, fails to draw because of conditions beyond his control. Consequently, to operate his business successfully, he must look to the capacity-drawing pictures, played under favorable conditions, to absorb a share of these losses. But under the terms Goldwyn demands for his pictures, a part absorption of these losses is not possible. Goldwyn wants an outlet for his pictures, but he is unwilling to participate constructively in the maintenance of that outlet. He would, in other words, have his cake and eat it. It would be much more in harmony with his liberal policy toward his employees, if Goldwyn should announce a plan, not for the elimination of the "little fellow," the subsequentrun operator, but for the betterment of his lot. MONOPOLY IN PRACTICE In its October 13 issue, Harrison's Reports called attention to the Government's victory in the Schine case, quoting porfions of Judge John Knight's opinion as reported in the trade press. At that time, the full text of the opinion was not available, and the promise was made that, if the full opinion should contain information of interest to exhibitors, such information would be reported in these columns. An official copy of the opinion discloses that Judge Knight made a comprehensive study of the evidence in the case, and from it, he deduced the methods and practices employed by the Schine circuit to effectuate an unlawful monopoly. Since there arc many exhibitors who may benefit from a knowledge of what Judge Knight held to be unlawful, portions of the opinion are herewith reproduced. It should be pointed out at the outset, however, that the entire group of corporate defendants, comprising the Schine circuit, are referred to in the opinion as "Schine," the "Schine Circuit," or as "the Circuit." Judge Knight wrote: "The means and methods employed by the different defendant corporations through their officers and authorized representatives to obtain a 'monopolistic' control were numerous. Principally among these were arbitrarily depriving independents of first and second run pictures, securing unreasonable clearances, making threats to build or open closed theatres to prevent construction or operation by independents, lowering admission prices, obtaining rental concessions, restricting independents who sold to Schine as to periods and places of operation, making long time franchise agreements covering the 'Circuit.' * * * "Some specific instances showing the predatory means used by 'Schine' follow. "The Schine defendants arbitrarily deprived independents of the first run product which they had previously enjoyed in several towns. * * * (Ed. Tv^ote: There follows a list of towns and the years involved.) "Independents were arbitrarily deprived of second run product which they had previously exhibited, * * * Relative to six towns including Corning, Lynch wrote on October 21, 1933, Metro: 'If there are any other opposition towns where you believe you can sell a second run, I would appreciate it if you would take the matter up with me first before selling." In 1932 Lynch wrote Flynn a letter say, among other things: 'I want you to refrain from selling him (independent) any pictures whatsoever." and Metro through Flynn agreed not to do so. Lynch also wired Fox to withhold selling to this independent and wrote Fox' agent saying 'have also asked him (Schmertz — Fox agent) to refrain from selling this man second run/ " 'Schine' was able to secure unreasonable clearances year after year in many towns. A few only need to be mentioned. * * * (Ed. J^ote: There follows a list of towns with clear' ance ranging from 90 days to 180 days.) "The license contracts with 'Schine' in many instances specified minimum admission prices for the various runs as well as clearance period. To an extent this affects adversely the time given the competitor. Interstate Circuit v. United States, supra, clearly points the reasons for condemning such provisions in a film license contract or agreement. Schine got clearance * * * where none existed before. " 'Schine' made threats to build in various towns, such as Paris, where there was a sign up, Canadaigua by a sign and newspaper article published, and where he eventually did build. * * * "Defendants' authorized agents made statements to independents which are reasonably construed as threats. * * * (Continued on inside page)