Harrison's Reports (1947)

Entered as second-class matter January 4, 1921, at the post office at New York, New York, under the act of March 3, 1879. Harrison's Reports i' early Subscription Rates: 1270 AVENUE OF THE AMERICAS Published Weekly by United States $15.00 (Formerly Sixth Avenue) Harrison's Reports, Inc., U. S. Insular Possessions. 16.50 M v 1, <>n M v Publisher Canada 16.50 Wew Iorlc iy>, IN. I. p g HARRISON, Editor Mexico, Cuba, Spain 16.50 A Motion Picture Reviewing Service Great Britain 15.75 Devoted Chiefly to the Interests of the Exhibitors Established July 1, 1919 Australia, Now Zealand, India, Europe, Asia .... 17.50 Jtg Editorial Policy: No Problem Too Big for Its Editorial Circle 7-4622 35c a Copy Columns, if It is to Benefit the Exhibitor. A REVIEWING SERVICE FREE FROM THE INFLUENCE OF FILM ADVERTISING Vol. XXIX SATURDAY, JANUARY 11, 1947 No. 2 FINAL DECREE AN IMPROVEMENT BUT FAILS TO MEET FUNDAMENTAL OBJECTIVE From an exhibitor's point of view, there is no question that the final decree issued in the New York anti-trust suit is an improvement over the provisions outlined in the Statutory Court's opinion handed down last June. But, despite its good points, the decree as a whole leaves much to be desired because of the apparent loopholes that would enable the defendants, not only to circumvent the intent of the decision, but also to continue their powers of monopoly. Moreover, the language of the decree, with respect to the competitivebidding provisions, is so ambiguous that, to quote Jesse Stern, CIEA president, "it is practically impossible in any given situation to determine who is going to be the highest bidder for a picture unless the bidding is strictly on a flat rental basis." Pointing out that a distributor is not compelled to accept a bid even if it equals or exceeds the minimum flat rental asked, Mr. Stern states that "if the distributor finds that the theatre which is not the preferred customer is the highest bidder, he may throw out all the bids and call for new ones. In such a case, therefore, the distributor can keep calling for bids until the right customer makes the highest offer. And the right customer will know what his competitor offered so that on the second round of bidding he can top that offer." Mr. Abram F. Myers, chairman of the board and general counsel of National Allied, puts it very well when he says that "the finality of the decree is dubious since it does not afford the relief which the Department of Justice has many times declared is essential to the restoration of lawful competitive conditions in the motion picture industry." Because a professional analysis of the Decree, particularly one prepared by Mr. Myers, is of interest to all independent exhibitors, Harrison's Reports is deferring its own comments on the Decree's highlights in order to present his views. This is what Mr. Myers had to say, in part, in a January 6 bulletin sent to members of Allied : "The Court having in its opinion declared so emphatically against total divestiture, no one dared hope that it would include that remedy in its order. An armless man can count on his fingers the times in which any court has reversed itself after such a vigorous pronouncement. There was some hope that the Court might adopt the Government's secondary proposal of a 10-year ban on cross-licensing by the five theatre-owning defendants, but the Court also rejected that proposal. "The decree thus makes no provision for ending or reducing in any substantial degree the present monopoly power of the defendants except as the Court may later require the defendants to sell their interests in jointly-owned theatres to their 'independent' partners or to third parties. "The purpose of the Court as set forth in its opinion to preserve and protect the defendants' existing theatre holdings whilst providing against further expansion thereof and enjoining certain discriminatory practices, is fully carried out in the decree. "The Court ordered the theatre-owning defendants to terminate within two years all joint ownership of theatres, whether among the defendants or with so-called independents. According to the opinion this will affect some 1500 theatres, but of course, we do not know how many of these joint ownerships have been reduced to total ownership in the meantime, or what the attitude of the Court will be toward these later acquisitions. "The joker is that the order, following the opinion, does not make mandatory the disposition by defendants of their interests in jointly-owned theatres. It permits the defendants, subject to the approval of the Court, to acquire the interests of their co-owners. Thus in a case where a defendant today has a minority interest in a theatre or circuit of theatres (but not less than 5%) it may with the approval of the Court increase this to a 100% interest — and this in the name of law enforcement and under the guise of restoring competitive conditions! "Moreover, the decree would not touch the local and regional monopolies of certain defendants in areas where their theatres are already wholly owned. "While the decree is woefully weak on divestiture it is sharp in its prohibition of further theatre acquisitions. Except as the Court may permit acquisitions from co-owners, each theatre-owning defendant is enjoined 'from expanding its present theatre holdings in any manner whatsoever.' "Although the Court rejected a number of transparent proposals by the defendants for further weakening the provisions relating to joint-ownerships, and adopted strong measures for expediting the determination thereof, there is no reason to suppose that the Court will act with firmness in resisting defendants' pleas for permission to buy out their partners. "In the first place, the Court in denying total divestiture placed its seal of approval on producer-distributor ownership and operation of theatres. The defendants were no more vigorous in asserting their right to operate theatres than the Court was in upholding it. "A further weakness is that when the Court reached the conclusion that total divestiture should not be granted, it had before it defendants' total holdings, showing the full extent of their power. Now it is proposed to take up each jointly-owned theatre or circuit and apply it to Sherman Law tests without regard to defendant's other vast holdings. "Finally, there is the deplorable precedent set by Judge Goddard in permitting certain of the defendants to acquire approximately 100 theatres under the consent decree. While the consent decree was not co-extensive with the Sherman Law — a damning criticism of that document — and further acquisitions will be subjected to a different test, the indulgent attitude of that member of the Court is all too apparent. "Those who hope for substantial divestiture under the new decree may be leaning upon a slender reed. "The Court clung to its brain child — competitive bidding — though in modified form. (Continued on next page)