Motion Picture Daily (Oct-Dec 1946)

Motion Picture daily The Court Room Scene 6 Court Asks (Continued from page 1) riae briefs, along with the Motion Picture Theatre Owners of America, Conference of Independent Exhibitor Associations, Society of Independent Motion Picture Producers, Vanguard Films, Radio Center, Inc., and Joseph P. Day, Inc. Counsel for all of those were heard in court yesterday. All three members of the statutory court, including Judges H. W. Goddard and John Bright, along with Judge Hand, displayed keen interest when spokesmen for the independent producers sought road-show exemption from the ban on price fixing contained in their June 11 opinion. "What is the difference in principle between the less expensive and the more expensive pictures?" Judge Goddard asked. "Why is your client in such a pitiful state compared with the others, who don't say it will ruin them?" Judge Hand inquired of Samuel. S. Isseks, counsel for Vanguard, who explained that the independents, lacking theatres, needed protection against the theatre-owning defendants, who, under the opinion, will be allowed to raise admissions at will in their houses. ATA Intervention The ATA's intervention claim, made for the sole purpose of opposing auction sales, was presented by Thurman Arnold, who said the association is comprised of 6,000 theatres of all kinds and that the independent ones do not have adequate representation in the case. "I think the government agrees," he added. Declaring, "The Court has gone outside legal arrangements and tried to introduce competition," Arnold held that auction selling's "principal impact is on innocent parties," that bidding "cannot create a competitive market when the groups are not in equal bargaining power and the supply is tightly controlled," and that, since films are not a standard commodity, the plan would prove unworkable. "The exhibitors don't want to cut each other's throats," he said. "They would have to pay more and more for a scarcer and scarcer product." Contending that "if competitive bidding were applied, it's on the wrong end," he suggested that to have the defendants bid for the playing time of the exhibitors would be more appropriate. The court's plan would "result in collusion and create a smoke screen behind which coercive practices can HAVE YOU PLAYED "THE CAPTAIN SHOW" FAVORITE FILMS CORP. 630 9th Ave., New York 19. N. Y. THE commodious Federal courtroom found its accommodations taxed almost to the limit as the hearings looking to the drafting of a final decree in the industry anti-trust suit got under way here yesterday. It was the exhibitors' day in court. All national and virtually all regional exhibitor organizations were represented. Counsel for all exhibitor petioners were heard by the court and, despite the fact that the day's session lasted only two hours and 50 minutes, and embraced several non-exhibitor petitioners, no time limit was imposed upon the attorneys and the court heard them out. In addition, their prepared briefs were received by the court. • The hearings drew exhibitor organization men from all over the country. Among them were: Fred Wehrenberg, Herman Levy and Mitchell Wolf son of MPTOA; Abram F. Myers and Jack Kirsch of Allied States; Si Fabian and Ted R. Gamble of American Theatres Association; Jesse Stern, Conference of Independent Exhibitor Associations; Mack Jackson, Ben L. Strozier and Henry Reeve, Confederacy of Southern Associations. Among court room spectators glimpsed were : Ben Kaimenson, Robert Perkins and Howard Levinson, Warners; Austin Keough, Leonard Goldenson and Louis' Phillips, Paramount; Sam Pinanski, M. and P. Theatres; Gordon Yowigman, RKO ; Sidney Schreiber, Motion Picture Association; Tyree Diliard, Jr., Loew's; Edward C. Raftery and George Raftery, United Artists-Universal; Louis Frohlich, Co lumbia. Legal talent flooded the enclosure directly in front of the bench and spilled over into jury boxes and spectators' benches. It fooked for a moment as though the defendants and Department of Justice were about to agree on something— the something being opposition to intervention. John W. Davis of Loew's counsel indicated the opposition of the theatre-owning defendants and the court was told by Robert L. Wright, special assistant to the Attorney General, that the Gov which would "remove from this industry every element of stability which has yet reached it." The CSA's spokesmen, John G. Jackson and Robert T. Barton, took the position that the relief for independent exhibitors set forth in the court's opinion would be adequate if auction selling were eliminated. In response to a question from Judge Goddard, Jackson said the 2,200 theatres he claims to represent have no additional testimony to offer "unless our petition to intervene is controverted." He pointed out thaj intervention, rather than amicus curiae, was necessary in order that the association might be heard verbally by the Supreme Court at a later date. In a thorough analysis of auction selling, which Judge Hand termed an "interesting argument," Barton stressed that the complicated machinery needed for picture-by-picture bidding and the arbitration of controversies he foresaw as arising would ernment's position was substantially the same. Then Louis Frohlich, Columbia counsel, ruined the rare spectacle of a defense-government accord by stating that Columbia not only had no objection to intervention but thinks the exhibitors belong in the case in order to be able to speak for themselves on appeal to the U. S. Supreme Court, which they will not be able to do unless they intervene. • Samuel Isseks, attorney for Vanguard Films, argued for the exemption of road-shows from the decree so that advanced admissions for them could be specified. "Why do you need to fix prices?" Judge Augustus Hand asked. "To get our money back," Isseks replied. • Herman Levy, MPTOA general counsel, drew smiles from the Federal jurists as he neared the end of his addres's to the court and then essayed some further remarks against competitive bidding. "Haven't we been over thai? Is that new?" Judge Hand asked. "It's not new," Levy replied, "but I thought mine was more forceful." Levy immediately vuithdrew the comment, zvhich he had offered goodnaturedly. Thurman Arnold, former government "trust-buster," and Paul Williams, his former assistant, both active on the Government's side in the early days of the case, found themselves opposed by the Government now in their petitions to intervene on behalf of ATA and SCTOA. • Abram Myers, appearing for CIEA, of which Allied is a member, took occasion in his address to thQ court to marvel at the number of independent exhibitor spokesmen in court, claiming his constituents are the only ones without an affiliation of some kind with defendants. • Paid Williams, discussing disagreements over blocks of five in the consent decree among Department of Justice officials, was cut short by Judge Hand. "It's abs'urd," the jurist remarked, "to talk about your housekeeping and the deep divisions among yourselves'' cause the exhibitors a costly delay in receiving film. "A seat not sold is gone forever," he commented. He complained that auctions would foster monopolies, increase rental terms, knock out adjustments on percentage pictures that flop, saddle theatres with unbalanced programs and prevent two small houses in the same town from combining on a day-and-date basis to compete with a larger house. When asked by Judge Hand if his client was "satisfied with things as they were," Barton indicated a large measure of satisfaction. "Then, unfortunately," commented the Judge, "you don't represent the class that did object." At this point, the defendants, through attorney John Davis, stated that they obiected to intervention petitions, which would make exhibitor groups parties to the suit, but expressed a willingness to have them heard as amicus curiae. Robert L. Wright, Special Assistant to the Attorney General, said : "That's substan Tuesday, October 22, 1946 tially our position. These people represent no organization but themselves. There are others, of other views. Making them parties would hopelessly confuse the issues." A dissenting view, however, was expressed by Louis Frohlich, Columbia counsel, who said he thought the interventions should be allowed in order to give the groups standing with the Supreme Court. "I think the Supreme Court will be willing to hear 15,000 exhibitors," he added. The case of the independent^ ••<)ducers was put to the court by^ _ jris L. Ernst, representing the Society of Independent Motion Picture Producers, and Isseks for Vanguard. "The major hope of the industry is the hope that competition can be presented by the independents," Ernst declared. If there are no "horizontal accords or domination of the market," price fixing, at increased rates, for road shows should be allowed, he argued. Cites 'Duel's' $5,500,000 Isseks, pointing out that David O. Selznick had spent $5,500,000 on "Duel in the Sun" and was planning to road-show it beginning Dec. 15, said this arrangement would be necessary to get back the investment. To the evident surprise of the court, he explained, and the defendants confirmed, that the industry has had only four road shows since 1938. Isseks was questioned closely by Judge Hand as to whether Vanguard was "affiliated with anybody." He answered that the company is not, but distributes through United Artists. He urged that road shows be allowed for all producers or at least for the three minor defendants and those who release through them and that, in particular, an exception should be made of films begun before the court's June opinion was rendered. Asked by the court if the Government had any objection to price fixing for special pictures, Wright said he would go into the matter more fully later and added: "We are opposed to a road-show exception per se." On behalf of Radio Centre, Inc., operators of the Mosque Theatre, Newark, David Sher spoke briefly in favor of a ban on cross-licensing if auction bidding is instituted. Herman Levy, MPTOA counsel, asked the court if the June opinion meant that salesmen would be permitted to go from theatre to theatre passing along competitive bids in order to get higher terms. If so, he said, competition would be restricted and rentals would increase. He urged that the court simply enjoin unlawful acts and then "open the door" to competition. "The tests set forth for determining clearance in the court's June 11th decree would be an alternative plan for buying pictures also," he suggested. Levy expressed disappointment that the Government has asked for liquidation of the arbitration system and asked the court to retain it. He mentioned his association's poll of exhibitors, which showed 261 opposed to auctions, 19 in favor. Finally, Levy said MPTOA has no objection to road shows "if it is a national policy, of single cities are not picked out." Final speaker at the hearing was Abram F. Myers, CIEA general counsel, who voiced regret at "the negative attitude to the Government's position" which, he said, the other at-, torneys had put forward. Looking forward to the contingency, "however remote," of auction selling, he said his organization wanted to make it as workable as possible, then urged a ban on cross-licensing and percentage (Continued on page 7) continue," Arnold concluded. Paul Williams, outlining the position of SOTCA, which seeks to intervene along with ATA, stated that, under the consent decree, which provides selling in blocks of five, exhibitors are forced to buy many films they cannot use. "We want to buy on an annual basis with reasonable rights of elimination," he said, holding that there is nothing in law to prevent such buying. Williams spoke of auction selling as "an encroachment on the legislative field,"