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FEDERAL TRADE COMMISSION 233
successful than any other method that had been developed by any distributing company.
Several distributors testified that the selling of pictures in blocks was simply a wholesale type of selling as opposed to the alternative method of selling each picture individually. Although the different pictures were not precisely similar to each other as were the different units of most commodities, it was claimed that block booking had the characteristics of wholesaling in that it involved the sale of quantities of pictures at lower prices per picture than they would be sold for individually.
The distributors maintained that block booking, by increasing the size of the average order from each exhibitor, enabled them to send salesmen to the smallest exhibitors. The block purchases of even the smallest exhibitors were sufficiently large to warrant the necessary sales expense. Furthermore, it was demonstrated that if pictures were sold individually and a salesman sent to an exhibitor each time a new picture was released, the selling expense in the case of the small rural theaters would be more than the rentals received. Many small rural theaters paid as little as $7.50 per week for features. Without block booking distributors would have been reluctant to serve such theaters. The statement was made by an executive of a large distributing company that it cost at least $10 to make a call on a theater.
Mr. C. C. Petti John, general counsel for the Motion Picture Producers and Distributors of America, Incorporated, an association of which the Famous Players-Lasky Corporation was a member, said at the hearing on the Brookhart bill:6
A further effect of abolishing this sales system would be to increase the price of the pictures. It is elementary to say that one can wholesale his product cheaper than retail it.
A distributor can make a better price on a group or block of pictures than on one or two, as the sales cost is thereby diminished. The selling of motion pictures, one at a time, at prices like $7.50, $10, and $12.50, for feature pictures, cannot be continued if this bill becomes law. The traveling expenses of a salesman alone, to a theater 50 miles from an exchange center, would be greater than any rental to be gained from the account. Over 5,000 of the 20,303 theaters are located in towns with a population of 2,500 or less. These theaters rent complete picture programs for as low as $5 a night, because by contracting for their programs in groups the selling costs of the distribution are so low
6 Report of hearing on Brookhart bill, page 183.