Harrison's Reports (1946)

156 HARRISON'S REPORTS "The only group licensing we arc prepared to sanction is licensing by which the group is not offered on condition that the licensee shall take all the pictures included in it, or none, but in which the pictures are separately priced, and each picture is to be sold to the highest duly qualified bidder. As we have already indicated in discussing formula deals, master agreements, and franchises, the offering of pictures should be theatre by theatre, and if more than one picture is included in a license agreement, it will be only because of business convenience and to the extent that each picture so included has received the best bid." When discussing the illegality of license agreements discriminating against small independent exhibitors in favor of large circuits, the Court announced: ". . . Under the bidding system we are requiring such discriminations would appear impossible. Those provisions which are not compatible with the operation of this system, or which are inherently unreasonable, such as a provision for clearance between theatres where there is no substantial competition, will no longer be included in licenses, as mentioned elsewhere, but otherwise the bidders will compete for licensing contracts on a parity, in that the same offer will be made to all prospective exhibitors in a community." The discriminations "in favor of affiliated licensee or licensees connected with independent circuits as against individual independents," according to the decision of the Court, "must be enjoined, and we believe will not exist in future licenses under the bidding system for which we are providing." In speaking of cities like Philadelphia and Cincinnati, where Warner and RKO have owned all the first-run theatres, the Court explained that — ". . . in such localities there would seem to be nothing to prevent other persons from building theatres of a similar type if the market for the distribution of films should be opened to the highest bidder and the builder of a new theatre could compete with the other theatre owners in obtaining pictures for exhibition in the theatre he had built. The only pictures that the present sole exhibitors in such localities could control would be their own, which they can always exhibit freely in their own theatres." ". . . If the bidding system we propose be set up, minimum prices in licenses eliminated, and the other restrictive agreements which we have discussed terminated, it is our opinion that adequate competition would exist. . . ." Under the topic "General Considerations," after ruling that by virtue of their copyrights the defendants had no absolute right to contract in violation of the anti-trust laws, the Court indicated that "business convenience and loyalty to former customers afford a lame excuse for depriving others of rights to compete and for perpetuating unreasonable restrictions." They negatived the argument that the steps proposed would interfere with acceptable business practices, and said: ". . . But we see nothing ruinous in the remedies proposed. Disputes which may arise under the bidding system are likely to relate to questions whether the bidder has a theatre adequate for the run for which he bids, whether the clearance requested is reasonable as regards his own theatre and those of others, and similar matters generally involved in comparing bids. . . ." Then they suggested that such disputes might be adjusted, with the consent of the defendants, by arbitration. This recommendation will be the subject of subsequent discussion in this paper. In their order for a decree the Expediting Court declared:61 "Defendants owning a legal or equitable interest in theatres of ninety-five per cent or more either directly or through subsidiaries may exhibit pictures of their own or of their wholly owned subsidiaries in such theatres upon such terms as tu admission prices and clearances and on such runs as they see fit. "No defendant or its subsidiaries shall exhibit its films other than on its own behalf or through wholly owned subsidiaries, or subsidiaries in which it has an interest of at least ninety-five per cent, without offering the license at a minimum price for any run desired by the oper-tors of each theatre within the competitive area. The licei.se desired shall in such case be granted to the highest n sponsible bidder having a theatre of a size and equipment adequate to show the picture upon the terms offered. The license shall be granted 6olely upon the merits and without discrimination in favor of affiliates, old customers, or any person whatever. Each license shall be offered and taken theatre by theatre and picture by picture. No contracts for exhibition shall be entered into, or if already outstanding shall be performed, in which the license to exhibit one feature is conditioned upon an agreement of the licensee to take a license of or e or more other features, but licenses to exhibit more than one feature may be included in a single instrument provided the licensee shall have had the opportunity to bid for each feature separately and shall have made the best bid for each picture so included. To the extent that any of the pictures have not been tradeshown prior to the granting of a license for more than a 6ingle picture, the licensee shall be given by the licensor the right to reject a percentage of such pictures not tradeshown prior to the granting of the license to be fixed by the decree. But that right to reject any picture must be exercised within ten days after there has been an opportunity afforded to the licensee to inspect it." The bidding system does not apply to films of a defendant exhibitor in its own theatres, whether such theatres are directly owned or are controlled by wholly-owned subsidiaries or by subsidiaries in which it has an interest of at least ninety-five per cent. With that sole exception the decision (Continued on inside page) THE ALLIED CONVENTION IN BOSTON From the point of attendance as well as enthusiasm, the Allied States convention held at the Copley-Plaza Hotel, in Boston, last week, was an outstanding success; it ranks with the greatest of any national exhibitor convention in the entire history of the motion picture industry. All the Allied leaders did fine work in putting the convention over. The keynote of the three-day meeting was sounded by Nathan Yamins, who stated that the purpose of the gathering was to restore order out of the chaotic conditions now existing within the industry. He emphasized, however, that not one of Allied's objectives were to be either sacrificed or compromised to bring such order about. A militant attitude prevailed throughout the meetings, with the numerous speakers strongly attacking the different trade abuses and suggesting various remedial steps that should be taken as a solution to the exhibitors' problems. The highlight of the convention was the final day's meeting, which was devoted to an open forum at which all exhibitors, regardless of their affiliation, were privileged to voice their views on existing problems. The forum session opened with a talk by Mr. Abram F. Myers, Allied's able general counsel, in which he gave a comprehensive analysis of the Statutory Court's decision and answered numerous questions directed to him from the floor. Harry Brandt, who attended the open forum at the head of a large ITOA delegation, urged the formation of one national independent exhibitor organization and, as an indication of his sincerity, accepted from Jack Kirsch, Allied's president, an invitation to meet with Allied's board of directors on the following day to discuss ways and means of bringing such an organization into being. Mr. Brandt indicated also that he was prepared to consider recommending that his organization become affiliated with Allied. (Ed. Note: As a result of this meeting, the ITOA, at its next meeting early in October, will vote upon coming into Allied as a unit.) Under the able guidance of Jack Kirsch, who brought all his resourcefulness and ingenuity into play, the meetings were at all times under control. Mr. Kirsch is a first-class leader, aggressive yet impartial. The Boston exhibitors, headed by Nathan Yamins, who acted as convention chairman, deserve great credit for the smooth way in which the convention arrangements were handled.