Harrison's Reports (1946)

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A REVIEWING SERVICE FREE FROM THE INFLUENCE OF FILM ADVERTISING Vol. XXVIII SATURDAY, JANUARY 5, 1946 No. 1 TESTIMONY AT TRIAL HITS BACK AT MAJOR COMPANIES In the November 10, 194? issue of this paper, under the heading, "Has the Independent Producer an Open Market?" there was discussed the question of whether or not the major companies' alleged monopolization of the distribution and exhibition of motion pictures had a restrictive control on the production activities of an independent producer. This paper pointed out that, from what had been said in the court room at the trial of the New York anti-trust suit, one was left with the impression that the independent producers were not too badly off under the present set-up of distribution and exhibition. Such an impression, we stated, was at variance with the views expressed privately by several independent producers, and we urged, therefore, that these views should be expressed openly if independent production were to forge ahead in this business. Using testimony that major company representatives had given to the court at the anti-trust trial in New York City, the Society of Independent Motion Picture Producers has given open expression to its members' views to prove that a monopoly in the exhibition field does exist, thus denying to the independent producer an opportunity to compete with the major companies in a free and open market. In a brief filed by the Society with the Court's permission as a "friend of the court," it is stated : "It is not the purpose of this brief to present matters of law ... or to engage in any lengthy discussion . . . of the evidence presented to the Court. It is our purpose, rather, to invite the attention of the Court to some phases of the evidence which may perhaps be entirely overlooked by counsel representing the Government and the defendants but which we believe to be of vital importance in a correct determination of the questions involved. ..." The brief then calls attention to part of the testimony given by Austin C. Keough, member of the board of directors of Paramount, to prove the case of the independent producer: "The independent producer usually is the best and most talented man, whether he be a producer or a director or sometimes a writer, or sometimes a star, man or woman, and for one reason or another, good to themselves, they go into independent production and nobody has any interest in their venture except as they perhaps provide financing for them." The brief then explains to the court that the independent producer must make an outstanding picture in competition with the average picture made by any one of the "big five"; otherwise his picture hasn't a chance because of the control of the choice theatres by the "big five." "... the evidence fairly shows that the motion pictures produced by the producing organizations of the 'big five' are given preference in playing time, length of engagements and terms over the pictures produced by independent producers. Indeed, a fair summary of the testimony of certain of the witnesses for the defendants shows that the distributor-exhibitor defendants claim the actual necessity of owning and operating theatres for the very reason that they cannot be assured of making a profit on their production activities without this ownership or control of theatres in which their picture can be exhibited. ..." Documentary evidence introduced by the Government shows, the brief states, that, by the use of theatre pooling agreements, franchises, cross-licensing and profit participations, the "big five" are now engaged in monopolistic practices within the purview of the Sherman Act. "... It is no answer for these defendants to say that when they initially entered the exhibition field by the purchase of theatres that step was taken as an absolute business necessity. It is the history of practically all combinations in restraint of trade that the business commenced as an individual undertaking, in open and free and fair competition, became an illegal combination in restraint of trade by growth and by the gaining of power attendant upon that growth to enormous proportions. ..." The brief points out the fact that the "big five" owns practically all the first-run theatres in all the large cities. From these comes the biggest proportion of the box-office receipts, and the independent producer has no hope of ever getting his pictures shown in them in open competition, because the "big five" have a strangle hold on the major portion of the boxoffice receipts, and the independent producer is discriminated against by the imposition of unfavorable terms and by being denied choice play-dates and extended runs. Although the government, as the plaintiff, did not accuse the "big five" of maintaining a monopoly in production, the brief of the independent producers asks: of what advantage is the fact that there is free and open competition in the production field when the defendants control the main exhibition outlets? "From what source," queries the brief, "is an independent producer able to make his outstanding contribution to the industry if he is to find a two million dollar motion picture on his hands with no fair opportunity of having it exhibited in the main centers of population in the United States upon terms and conditions fairly equal to those of major producers with (Continued on last page)