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16 HARVARD BUSINESS REPORTS
Incorporated, and the Famous Players-Lasky Corporation, the formation of the former became a controversial matter. The viewpoint expressed by the Federal Trade Commission was substantially that of the founders of First National Exhibitors' Circuit, Incorporated. That set forth by the Famous PlayersLasky Corporation was its own.
The Federal Trade Commission in its brief made the following summary of the testimony:1
FIRST NATIONAL WAS AN ORGANIZED EFFORT OF SOME 20 EXHIBITORS
i. To open a market for, and to encourage, the independent producers to continue in business.
2. To obtain better pictures for their theaters.
3. To obtain pictures at a price they could afford to pay and make
a reasonable profit.
FIRST NATIONAL WAS AN ORGANIZED PROTEST OF THESE EXHIBITORS
i. Against Zukor's2 expressed purpose to merge the three branches of the industry.
2. Against Zukor's methods of selling the combined product of
his numerous merged producing companies, which was resulting in destroying the market for the small independent producers.
3. Against Zukor's dominating control of the best stars and direc
tors which compelled the exhibitors to buy Zukor's product, whether desirable or not, at exorbitant prices.
The Famous Players-Lasky Corporation in the same case summarized the following reasons advanced by witnesses for the formation of First National Exhibitors' Circuit, Incorporated.3
1 . Exhibitors understood that the Famous Players-Lasky Corpora
tion was planning to go into exhibition.
(This Famous Players-Lasky Corporation denied)
2. Film rentals were increasing and it was hoped by the formation
of this company to buy cooperatively at lower prices.
3. The franchise holders hoped to participate in the profits of
distribution as well as exhibition.
4. Famous Players-Lasky Corporation pictures and those of other
companies were being sold only in blocks.
(The Famous Players-Lasky Corporation argued that the franchise system also was block booking.)
1 Federal Trade Commission brief, Part 1, pages 56-58 in case against Famous Players-Lasky Corporation.
2 Mr. Zukor was president of the Famous Players-Lasky Corporation.
3 Brief of Famous Players-Lasky Corporation, Vol. 1, page 140 in case Federal Trade Commission v. Famous Players-Lasky Corporation.