Minutes of evidence taken before the Departmental Committee on Cinematograph Films (1936)

116 COMMITTEE ON CINEMATOGRAPH FILMS 30 June, 1936.] Mr. S. Rowsox. [Continued. 11-50. (Chairman): I am sure we have read your document with great interest, Mr. Rowson ; it will l>e very helpful to us. I will not take you through the first part, but I would like to go to paragraph 21. You there deal with the resistance of American distributors to British films entering the American market owing to the theatres being controlled by the major producing companies? — That is so. 1151. Could you give us any idea as to what proportion of the whole are constituted by these tied circuits? — Yes, Sir, I could. I have here a document called " The Motion Picture Industry Study ", which was prepared under the National Recovery Administration, and was recently presented to the Motion Picture Department at Washington. The date is stated to be February, 1936, and I find in there a table of the number of theatres in America in 1935. It is there given as 18,000 odd, but those include all kinds of motion picture theatres, including those which were closed and not being operated. The figures which I have given in the appendix to my memorandum refer only to operating theatres, about 14.. 500. Of this number of lS.L^ there are 2,073 described as belonging to " affiliated circuit theatres," that is, the theatres owned by the producing organisations, and I should say that of that 2,073 they are practically all operating. 1152. Do they have a renter in between? — They have their own renter in between ; they call them Exchanges. 1153. And the other theatres are independent, they are not linked with any renters who are independent of the producers? — No, Sir. There are besides 3,070 theatres which belong to various circuits, but not affiliated, mere combinations of theatres operating solely for the purpose of collective buying and collective operation, but they are not directly connected with any producer organisations. 1154. Are they combined so as to arrange dates mutually convenient or is it with a view to bringing down the price? — Well, they are simply, I think, multiple stores, if you like, under one control. 1155. It is not a matter of the theatres getting together to deal on more satisfactory terms with the renters? — No, these 3,000 odd unaffiliated circuit theatres belong to groups of anything from ten's to forty's and fifty's. 1156. Then by far the greater portion of these theatres are independent, are they, as they are here ? — Yes. 1157. And has the same difficulty arisen in America that the smaller independent groups complain that they do not get a fair deal from the renters? — It does not work in that way, Sir. These 2,000 odd affiliated theatres are in the main, and they owe their origin to it, " key " theatres, by which I mean they have been acquired as shop windows for the product of their affiliated producer organisations. Being key theatres they lead the way in every district, and pictures can only find their showing in other theatres after having passed these first theatres. It is no use trying to exploit pictures in America, as it is no use here, unless you get what we call the first runs. The first runs control the situation, and of these 2,073 theatres nearly all of them are first run houses. If we were to analyse — which I am not able to do — the whole of the first run theatres in America and ascertain how many of them are included in this 2,073 you would find that the proportion was an extraordinarily high one, possibly 50 per cent., I would not be surprised, I can only ^im'ss that, but a very high proportion I am certain. and therefore though there might be a number of independent first run houses in different parts of the country, they would mean nothing at all towards exploitation unless you have previously passed the first run key houses belonging to the affiliated circuits, and apart from that the strength of the producer organisations in America is such that the unaffiliated circuits and other independent first runs arc mainly dependent upon the major organisations for their first runs, they must take their pictures— and therefore they get themselves tied up again by block contracts. They get themselves tied up at the beginning of the booking season. There is every possible resistance, natural resistance if you like, because their date books are already filled up, before the independent picture coming from abroad can possibly find an entry. The door is closed partly by the affiliated theatres but partly by the selling system, and more so by the selling methods employed by the American exchanges. 1158. I am very much interested to hear that, but I was not only asking with a view to seeing how it affects the export of pictures from here, I was wondering whether the position there had any bearing on the problem which is alleged to exist by some of the exhibitors here, that the small independent people cannot negotiate satisfactory bargains with the renters. What we are told here is that the policy of the renters not to allow any negotiations with groups unless they are people who have got actual financial control of each theatre has operated very harshly on the exhibitors, that there is nothing of that sort in America, the system is so entirely different? — The system is in that respect quite different. 1159. Have you any knowledge of this problem about the exhibitors? — On this side? 1160. Yes. — I think I understand the problem on this side, yes. 1161. Could you usefully tell us anything about that, whether there is any way of dealing with this grievance on the part of the smaller exhibitors? — Perhaps this statement bears on that question, my Lord. I intended to ask permission to put in a supplementary note to my evidence, a supplementary note on co-operative production by exhibitors — that is what I call it — and it is only a brief note if I may read it to you, and I will then pass it in. 1162. Certainly. — " The attention of the Committee is drawn to the following situation, and I hope they will be prepared to state their views and, if thought desirable, make recommendations upon it. "It is well known that exhibitors are deeply concerned at the rental prices they are compelled to pay distributors for films. Without admitting the case they make as to the excessive burden of these prices, there is some added irritation and resentment by the fact that the organised renters' policy is designed to place individual and independent exhibitors in a weaker bargaining position than in the case of competing theatres forming part of a circuit. Collective action by groups of independent exhibitors has become impossible owing to the attitude of the organised renters, and among other consequences it frequently happens, so it is alleged by exhibitors, that independent exhibitors have a much more restricted choice of pictures or are compelled to pay substantially higher sums for them than their neighbours or other opposition houses, though their theatres are smaller or have smaller earning capacity." I think that is the problem you were asking me about. " Among the devices for defeating this monopolistic tendency of the larger circuits, the suggestion has been made for the creation of a new producing and distributing company in which exhibitors would be the principal shareholders. These exhibitors would be expected to enter into binding contracts to show the films produced or acquired by the Company as and when they come on the market. The contracts would be an essential feature of the company's organisation, as the provision of finance and capital is dependent on them. " 1 have been consulted mere than once on a scheme of this kind, and 1 have always had to advise that such contracts would he in contravention with Part I of the present Act-. This is because their essential feature is an obligation