Harrison's Reports (1949)

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 Yearly 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. 16.60 M v , M v Publisher Canada 16.50 New York zo» W. T. p g HARRISON, Editor Mexico, Cuba, Spain 16.50 A Motion Picture Reviewing Service Great Britain 17.50 Devoted Chiefly to the Interests of the Exhibitors Established July 1 1919 Australia, New Zealand, India, Europe Asia .... 17.50 Ujj EdUorial p0iicy: 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. XXXI SATURDAY, FEBRUARY 12, 1949 No. 7 MYERS DENOUNCES PROPOSED ARBITRATION SYSTEM The proposed new arbitration system drafted by the attorneys for Paramount, Warner Bros., 20th Century-Fox and Loew's, and submitted two weeks ago to the Department of Justice for approval, was blasted in no uncertain terms in a bulletin issued last week by Mr. Abram F. Myers, National Allied's general counsel, who called the new plan "an insult to the intelligence of the Court, the Attorney General, the other distributors who have been invited to join it, and the exhibitors — whether they choose to recog' nize it as such or not." Maintaining that "the only arbitration plan that conceivably could be appropriate is one that is purely procedural and merely provides the machinery for settling differences arising under the Court's final decree," Mr. Myers had this to say : "The plan submitted by the above-named distributors is, in effect, a final decree containing substantive provisions, which are not only out of place, but which are clearly contrary to the Supreme Court's opinion. "For example: The Supreme Court, in dealing with block-booking, said : 'We do not suggest that films may not be sold in blocks or groups, when there is no requirement, express or implied, for the purchase of more than one film.' "The selling method defined by the Supreme Court is by all odds the most satisfactory that has ever been devised and has met with favor among the exhibitors. It permits the distributor to sell and the exhibitor to buy as many pictures as they can agree upon at one time. The blind-selling evil is cured by providing that, if a group is licensed which has not been trade-shown, the exhibitor shall have a 20% cancellation right. "Now these distributors by their so-called 'arbitration plan' propose an injunction binding on themselves and on such other distributors as may be included in it, from offering or licensing their pictures 'other than theatre-by-theatre and picture-by-picture.' This method of selling, it will be recalled, was a part of the District Court's plan for competitive bidding, which plan was opposed by all exhibitors regardless of affiliation and was thrown out by the Supreme Court. "Again, Section IV of the proposed plan provides, in substance, that the distributors may license pictures to any theatres in which they may have a 'proprietary interest' on any terms they please. Thus they would cut off all thought of total divorcement notwithstanding the precedents created by the RKO decree and (according to the trade papers) the imminent Paramount decree. "This objection is aggravated by the proposed wording of the provision, which is not limited to wholly-owned theatres, as in the District Court version, but extends to 'any theatre in which such distributor defendant has, or may acquire pursuant to the terms of this decree, a proprietary interest, either directly or through subsidiaries or affiliates.' independent exhibitors who have become affiliated with a producer-distributor. It is hard to escape the conclusion that the distributors are seeking to insinuate into the plan a provision which would negative the Supreme Court's clear-cut requirement that defendants' joint holdings with independent exhibitors shall be terminated. "It is our interpretation of the Supreme Court's opinion that in reversing the District Court's findings and order on monopoly and divestiture it intended also to reverse a provision in the lower Court's decree permitting the defendants to deal with their wholly-owned theatres on their own terms. In any event, the decrees in the Bigelow (Jackson Park) and Goldman Cases make no such exception in favor of even the defendants' wholly-owned theatres, and the Supreme Court declined to review those orders on certiorari. "By Section VI (4-a) the distributors would consent to arbitrate a complaint by an exhibitor operating in competition with a distributor-defendant's theatre, that he has been denied a picture on a desired run; and that is inconsistent with the proposed Section IV. That is, unless this is construed to mean an affiliated theatre other than one affiliated with the distributor involved in the arbitration. But whereas in a controversy between two independent theatres the only issue is the arbitrary refusal to license a picture on a desired run, when we get down to an arbitration involving a distributor-defendant's theatre, the complainant must show that the distributor-defendant's theatre made an offer for the picture which 'was so excessive as to have been made in bad faith and for the primary purpose of depriving the complainant's theatre of the opportunity to exhibit the feature on the run in question.' The award to the complainant, if he can sustain this burden of proof, is his 'actual pecuniary loss' not to exceed $5,000.00. "The obvious purpose and intent of the provisions thus far reviewed is to force a return to competitive bidding which the Supreme Court threw out for the very reason that 'The question as to who is the highest bidder involves the use of standards incapable of precise definition because the bids being compared contain different ingredients.' This bidding being 'voluntary' and not prescribed by law — if, in fact, it is not contrary to the Supreme Court's mandate — is surrounded by no safeguards for the protection of the independent exhibitors. How is an independent exhibitor to know whether the affiliated theatre's bid was excessive before he files his complaint and requires the distributor to disclose the bids? The distributors now selling by bidding steadfastly refuse to disclose to the disappointed bidder the amount of the successful bid. "Again, how would the exhibitor prove his 'actual pecuniary loss'? Would it be the formula set out in most license agreements for determining an exhibitor's loss resulting from the failure of a distributor to deliver a licensed picture? Or would it be based on the attendance at the affiliated theatre that played the picture? In the latter event, will the attendance reports of such theatres be made available to the arbitrator? This provision is so carefully drawn to protect the distributor's interest, and so vague as to procedure and the complainant's rights, as to be reminiscent of the drafts 'Affiliates' in the motion picture business mean erstwhile (Continued on bac\ page)