Investigation of concentration of economic power; monograph no. 1[-43] (1940)
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22 CONCENTRATION OF ECONOMIC POWER lines of enterprise who is generally less restricted in the disposition of his product. Another unusual circumstance in the motion picture industry is the- perishableness of the product handled. The necessity or desirability of showing a picture to the public while it is still new makes freshness- or priority in vending the product to the public a most important factor. Thus, it is found that most of the unusual trade practices of th& industry, and coincidentally most of its controversies, arise either from the special legal privileges accorded a copyright holder or from the efforts to show the product while it is still new. The principal objective of the industry is, of course, to show films to the consumer, and this takes place through the medium of the exhibitor. Naturally, therefore, it is the exhibitor—the Unk between the producer-distributor and the consumer^—who is involved in most of the controversies of the industry. Each exhibitor has two important relationships with other elements in the industry. One concerns his contact with the distributors from whom he must secure supplies of film. The other affects the exhibitors- with whom he is in competition for a supply of film and for priority of showing. Looking first at the distributors, we find that virtually all first- quality feature films produced in the United States are distributed through eight companies. Thus, where the supply of films is con- cerned, the exhibitor faces a high degree of concentration. With respect to relations between exhibitors, it is found that most theaters are operated singly or in groups of two or three. In other cases, however, a great many theaters may be tied together under common management and control to form a single large chain exhibi- tion organization. The number of theaters acting together as a. single bargaining unit in this way may run into the hundreds. The small exhibitor is thus frequently in competition with a large and financially powerful organization, which perhaps is still further rein- forced by affiliation with one of the major producer-distributors. Claims of unfair business tactics are most usually advanced by the smaller elements within an industry. The very size of the larger units gives them power, and this power is their protection. The controversies usually involve claims by the smaller elements that the larger organizations misuse the power granted them by their size to stifle or eliminate competition. Accordingly, most of the controversies of the motion picture in- dustry may be divided into two general classes. One class includes those practices which, according to small exhibitors, are used by the large distributor organizations to maximize their profits at the expense of the exhibitors and the public. In this category may be placed block booking, blind selling, forcing of short subjects, and designating of play dates. The other class comprises those practices which small exhibitors contend have been used by large exhibitor organizations to drive them out of business or place them in subordinate competitive positions. Under this heading are such practices as overbuying,, setting of admission prices, and clearance and zoning. Of course, not all aspects of these practices may be so neatly divided into two such general classes. Since the five largest companies in the industry act not only as the most important producers and distributors