Harrison's Reports (1955)

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 SIXTH AVENUE Published Weekly by United States f 16.00 N„„ v«* ->(\ N Y Harrison's Reports, Inc.. U. S. Insular Possessions. 16.50 1 W ' ' Publisher Canada 16.50 A Motion Picture Reviewing Service * S. HARRISON, Editor Mexico, Cuba, Spain 16.50 Devoted Chiefly to the Interests of the Exhibitors Great Britain ... 17.50 Established July 1, 1919 Australia, New Zealand, India, Europe, Asia 17.50 its Editorial Policy: No Problem Too Big for Its Editorial _ ~T~T~AM9 35c a Copy Columns, if It is to Benefit the Exhibitor. Circle 7-46^Z A REVIEWING SERVICE FREE FROM THE INFLUENCE OF FILM ADVERTISING Vol. XXXVII SATURDAY, DECEMBER 10, 1955 No. 50 MYERS LASHES BACK AT PHILLIPS (Editor's N.ote: The following is the text of a letter dated December 1, sent by Abram F. Myers, Rational Alfred's general counsel and board chairman, to Louis Phillips, Paramount's general counsel, in reply to the exception ta\en by Mr. Phillips in regard to the doubts cast by Mr. Myers on the propriety and legality of Paramount' s so-called "merchandising engagements." 'The details of Mr. Phillips' letter to Mr. Myers were published in last wee\'s issue. Harrison's Reports is reproducing the complete text of Mr. Myers' letter so that its subscribers may have a fuller and better understanding of the important issues involved in this controversy between Paramount and Rational Allied.) Dear Mr. Phillips: Let me say at the outset that I was very glad to receive via the trade papers and U. S. Mail your letter dated November 23 which purports to be an answer to my unpublished letter to George Weltner dated October 14. It is right and proper that the matters dealt with in my letter should be publicly debated so that the exhibitors may make up their minds in the light of all the arguments pro and con. And I personally feel complimented because, according to Variety, this is the first time you have sounded off publicly against anyone in the picture business and also because it apparently required an amount of time equal to that consumed by the Deluge to figure out answers to the points I raised. Had your letter been confined to the contents of my letter to Weltner I would be inclined merely to release the latter so that the exhibitors could compare the two, point by point. But you saw fit to fire back, not with a rifle aimed at your immediate target, but with a scatter-gun, and the extraneous matters you have imported into the controversy call for further comment. In fairness to you let me explain that I have been privileged to read your letter to the Select Committee on Small Business of the House of Representatives dated August 25, dealing with the handling of "Strategic Air Command." Also, that I propose to follow your example and release this letter to the trade papers. 1. It is hard to believe that you are serious in claiming that there is inconsistency between the position I have heretofore taken in regard to the system of fixed runs and clearances denounced by the courts in United States v. Paramount et al. and the following passage in my letter to Weltner: "Fear is entertained in exhibitor circles that Paramount has adopted these 'merchandising' engagements as a permanent policy and that it may spread to other companies. If that should come to pass it would totally destroy the system of releasing pictures to the established runs in their respective order and of observing reasonable clearances between runs which has served the industry so well since its earliest days." (Italics yours.) Now Paramount was not a stranger to the Government's suit and as its Assistant General Counsel you surely were not unaware of the issues therein. You must know, therefore, than the system of fixed runs and clearances attacked by the Government and condemned by the courts was created for the benefit of the affiliated theatres and in order to exclude independent exhibitors from the preferred runs. That feature of the Government's case did not involve, and had nothing to do with, the great network of runs and clearances which is necessary unless all theatres everywhere are to play the same pictures at the same time. Under that system all theatres, and especially subsequent run and small town theatres, license their pictures year in and year out without having to negotiate specially in regard to tun and clearance on every separate license. I agree that there is nothing "sacred" about the present clearances within any accepted definition of that word. I also agree that Paramount has not been enjoined from changing clearances unless the result is to impose clearances that are unreasonable or upon theatres that are not substantially competitive. The point of my letter to Weltner was that since present clearances have endured so long, they may be presumed to be reasonable, but increases therein resulting from the prereleasing practice may render them unlawful. Putting these legal considerations aside, the astounding thing to me, and the disappointing thing to the exhibitors, is your abrupt dismissal of complaints on this score on the basis of Paramount's power and rights and in utter disregard of the exhibitors convenience, interests and welfare. 2. You state that Paramount is observing the injunction scrupulously and that the merchandising engagements are not violative of the injunctive provisions of the decree. But since you have raised the issue of fixed runs and clearances, confusing a system that never has been challenged by public authority with the monopolistic system condemned in the Paramount Case, let me say that I know of no device better calculated to restore that unlawful system than these merchandising engagements. "The Supreme Court's opinion will remind you that in 1945 the five distributor-exhibitors had interests in only about 17% of the theatres in the United States, but those theatres paid 45% of the total domestic film revenue received by all eight defendants. That was because in 92 cities of the country with populations over 100,000, at least 70% of all the first run theatres were affiliated with film companies. Now I have no reason to believe that the predominance in the first run field has been much lessened by the divestitures under the decree. Moreover, the divorcement procedure was unique in modern times because it merely required, in the case of Paramount and most others, that the stock of the theatre company be distributed among the stockholders of the film companies. And in the case of Paramount and some others the men who headed the film companies are still on the job and the theatres are under the same management. Is it not fair to assume that in the vast majority of cases Paramount selects for these merchandising runs the first run theatres of the former affiliated (so-called "divorced") circuits? In my letter to Weltner I referred to Paramount's "handpicking" of theatres and you take exception to this. But your explanation offers slight, if any, contradiction. First, you admit selecting cities which, by reason of their size and importance, will be best from the standpoint of exploitation of the picture. Then in non-bidding situations you select the theatre which, in your judgment, affords the best outlet and is capable of producing the best outlet. Finally, where exhibitors have declared their desire to do so, you afford them an opportunity to bid for the run. When I wrote Weltner that I was informed that Paramount had decided that "Desperate Hours" should have merchandising engagements in only 128 theatres, I had confidence in my information and you do not contradict my statement. Moreover, I had in mind your statement to the House Small Business Committee that, in the case of "Strategic Air Command," . . . "there were 601 such carefully selected engagements or exhibitions." (Italics mine.) (continued on bac\ page)