Harrison's Reports (1958)

124 HARRISON'S REPORTS August 2, 1958 that concerns Allied members alone; it concerns every exhibitor who is being discriminated against by sales policies that deliberately delay availabilities, arbitrarily destroy established runs, force bidding between non-competitive theatres and fix admission prices, thus denying to him the right to play top pictures while they are reasonably new and fresh at terms that will permit him to charge admission prices that are within his patrons' means. The Allied booklet referred to is a masterpiece from the viewpoint of presenting the facts concerning the reasons why many theatres have lost prestige and good will, and have been and are being forced out of business. Every exhibitor should have a copy in his possession, for, in seeking to induce fellow businessmen and prominent citizens in his community to support his fight for existence, he could not present the facts more clearly or eloquently than they are presented in this booklet. If you have any trouble obtaining a copy, drop a line to this paper and we will endeavor to have one forwarded to you. Get busy at once in bringing your plight to the attention of the influential people in your community, and persuade them to swamp their Senators and Congressmen with letters. It is rare that a legislator will act deaf to appeals from his constituents. It should not be necessary to urge you to take prompt, energetic action, for on such action depends the safety of your investment and the security of your future in the business. SHOR DEMANDS D OF J ACTION AGAINST PARAMOUNT Rube Shor, the Cincinnati exhibitor leader and former president of National Allied, has sent to this paper the copy of a July 25 letter mailed to Victor R. Hansen, head of the Antitrust Division of the Department of Justice, stating that it represents his answer to Paramount on its policy of collecting a specific royalty per person admitted in connection with drive-in engagements of "The Ten Commandments." Pointing out that Leonard Kaufman, of Paramount^ legal department, has stated that the Department of Justice had passed upon this royalty idea based upon a similar policy in connection with the exhibition of "Peter Pan" and "Hans Christian Andersen," in which he (Shor) was involved, Shor charges that he knows this "not to be a fact." His letter to Hansen follows: "While, no doubt, you are not pleased to hear from me as in the past most of my communications to you have not produced responses which indicated that you were delighted to receive them, I feel it is necessary to call your attention to what I believe even the Department of Justice will consider a violation of the anti-trust laws. I have reference to the manner in which Paramount is attempting to force drivein theatres to fix admission prices on the picture 'Ten Commandments.' "Although 'Ten Commandments' was shown on subsequent run in conventional theatres throughout the country at the price of $1.25 for adults and 50c for children under licensing contracts which in the Cincinnati area gave Paramount 60% of the gross for the first week and 50% for the second, and I have heard, even larger percentages in other communities, the Department of Justice did not intervene inspite of the unusual uniformity in the admission price charged, although in many of the theatres in which this uniform price was charged the ordinary admission price was quite different. That these were fixed prices I know from my own experience at the Westwood Theatre in Cincinnati, Ohio. In Cincinnati, Ohio, Paramount let it definitely be known that unless theatres would agree to charge $1.25 for adults and 50c for children, Paramount would not license the 'Ten Commandments' to be shown at such theatre, and, of course, the film rental charged was 60% of the gross for the first week and 50% for the second. "In spite of the fact that the Twin Drive-in Theatre is the largest grossing theatre in Cincinnati, including even the downtown theatres, and plays either first runs or earliest subsequent runs, Paramount never offered the picture to the Twin Drive-In nor gave it an opportunity to play the picture, although many requests were made for the picture while the picture played on subsequent runs in Cincinnati. The picture played nineteen weeks on first run in downtown Cincinnati from December 21, 1956 to May 7, 1957. It opened on second run in arbitrarily chosen conventional houses in the suburbs on July 24, 1957. It was replayed in some suburban conventional theatres on December 20, 1957. It was given sole playing time at the Monte Vista (conventional) Theatre on March 30, 1958. Mind you, Paramount Pictures had agreed to play its pictures on a twenty-one day availability in the better (and some not so good) suburban houses and drive-in theatres. In spite of this agreement the first suburban run did not start until eleven weeks after closing downtown, and then was confined to a few houses excluding many of the regular twenty-one day houses and all the drive-ins. The second suburban run was likewise restricted and did not begin until more than a year and a half after closing downtown. The third suburban run was restricted to only one suburban house and was almost two years after downtown with drive-ins still excluded. The fact that the picture is now being first offered to the drive-in theatres indicates the most unreasonable clearance in the history of motion picture business. "To make matters worse, however, Paramount is attempting to fix admission prices charged by the drive-in theatres in a compulsory fashion by use of what, no doubt, Paramount considers a very cute trick. The Paramount form of contract offered to the drive-in theatres for the picture charges a fixed amount per person for all over twelve years of age, calling such amount a 'royalty,' and another fixed amount per person called a 'royalty' for all persons under twelve for the first week, and different amounts per person of each class for the second week. I have in my possession forms of contract submitted by Paramount for the Twin Drive-In Theatre in Cincinnati, Ohio, The Valley, Ramona and Holiday Drive-In Theatres in Hamilton, Ohio, and the Owens and Frontier Drive-In Theatres in Charleston, W. Va., the Valley Drive-In Theatre at St. Albans, W. Va., and the Trail Drive-In Theatre at Belle, West Virginia. "It is apparent that all these contracts in effect require the drive-in theatres to charge the equivalent of $1.25 per person for individuals over twelve years of age and 50c per person for individuals under twelve years of age, depending on whether there is or is not a local tax, and insure Paramount's getting 60% of the gross the first week and 50% of gross the second week. Thus, for example, at the Twin Drive-In Theatre at Cincinnati, Ohio, Paramount makes the charge of 68c per person for those over twelve years of age and 30c per person for those under twelve years of age the first week and the second week 57c per person for those over twelve years of age and 25c per person for those under twelve years of age. These figures clearly show that it is the exact equivalent for the first week of 60% of $1.25 less Federal and local admission taxes for persons over twelve years of age and 60% of 50c per person for children under twelve years of age (there being no admission taxes on 50c admissions); and for the second week 50% of $1.25 for those over twelve years of age, deducting the Federal and local admission taxes, and 50% of 50c per person under twelve. "The fact that this is definitely price fixing without a doubt is made conclusive by the fact that Paramount knows that the drive-in theatres do not charge admission for children under twelve at all, yet Paramount is requiring the theatres to make this charge for children under twelve. "It hardly seems right that the burden should be placed on me, an individual citizen and operator of a theatre to fight the battle of the antitrust laws for the benefit of the public and the exhibiting industry generally when the Department of Justice is required by law to undertake that function. When your predecessor, Judge Barnes, was head of the antitrust division, the 'Peter Pan' 'Hans Christian Andersen' price fixing efforts occured. At that time I defied the distributors and refused to fix the price of admission in spite of the devices they attempted to use at that time to accomplish the same result. I was threatened by them, but I, nevertheless, challenged them to bring suit, which of course, they did not do, as they knew they could not win in Court. At that time, unfortunately, I received no support from the Department of Justice. "My attorney advises me that the mere fact that a motion picture is copyrighted, gives it no greater protection under the anti-trust laws than if it were not copyrighted, and there are a number of cases in which the Supreme Court and the Federal Courts have held that the owner of a patent cannot use the exclusive control which the patentee holds over the patented invention to fix the price to be charged for the article by licensees or otherwise to violate the anti-trust laws. I know from reading decisions of the Supreme Court as a layman myself, the Supreme Court does not countenance price fixing with respect to the price to be charged by exhibitors insofar as motion picture distributors arc concerned. I noticed just recently in the papers that your very department frowned on the efforts of the auto industry to fix prices, (Continued on inside page)