Motion Picture Daily (Apr-Jun 1948)

6 Motion Picture Daily Wednesday, June 16, 1948 Para. Case (Continued from page 1) day. The date for its submission to the court has not been set. Judge Hand said that steps would be taken between now and Oct. 13 to name a third judge to replace the late Judge John Bright. The question of a third judge was given much weight at the hearing. Expressing fear that the proceedings would be long-drawn out, Judge Hand suggested the possibility of having the case heard by a one-judge court. If a three-judge court was mandatory, he said, perhaps an outside jurist could be called, in. With a touch of humor, he questioned, however, whether an outside judge would want to sit on the case even if he were a young man. He mentioned the name of Circuit Court Judge Thomas W. Swan as a possible candidate for the third place on the bench, but expressed doubt that Judge Swan might want to sit. Further support for the belief that the court and the industry were faced with lengthy proceedings came from Whitney North Seymour of counsel for Paramount. He told the court there was no way of establishing the legality of theatre holdings except by considering the matter situation by situation. That a long battle lay ahead was additionally indicated in a statement made by Austin C. Keough later in the day. 'We again may have to battle our way up to the Supreme Court," he said, "and we are prepared to do it." Wright Presses for Action Robert L. Wright, special assistant to the attorney general, disputed that a third judge was necessary in passing on the Government's request for a temporary writ to restrain the defendants from selling or acquiring theatres, from making franchise deals covering theatres affiliated with one or more of the defendants and from discriminating against film licensees competing with licensees affiliated with one or more of the companies, pending entry of a further order. Wright petitioned for temporary relief until a full court could render final judgment. Judge Hand took issue with Wright on the latter's contention that injunctive measures would prove an adequate substitute for the present arbitration system. "We've got to start afresh," Wright said in arguing that the arbitration system was "not subject to amendment" and did not suffice to halt discrimination. The court was urged by the Government's prosecutor that the monopoly and integration issues be reconsidered. Judge Hand indicated to Wright Para. Capital (Continued from page 1) are to be reduced, it is prudent for us to take steps to compensate for that reduction by shrinking our capital structure. Accordingly, it is our aim to design a program through which any proceeds from the disposition of assets will be applied to a contraction of our capital so that the end structure will be adapted to the assets and earning power left." Theatres Valued on '32-'35 Levels In replying to stockholders' questions, Balaban said that Paramount would make every effort to hold on to as many theatres as possible and, if forced to sell theatres, the company would try to hold on to the leases. The company's balance sheets do not show the true value of its theatre holdings, he noted, because they are carried at 1932 and 1935 levels. Balaban told the meeting that Paramount's theatre earnings "have held up much better than those from production-distribution." Although theatre receipts were down in about the same proportion as film rentals, costs in theatre operations increased less than those in production-distribution, he said. Observing that each branch of operation must "stand on its own feet," Bala-ban said the need for an independently healthy business condition is accentuated by "the uncertainty cast upon our theatre holdings by the anti-trust suit." Discussing increased costs and lower volume of business, Balaban said the best that can be done is to hold costs to the lowest point consistent with quality product and the "maintenance of an alert, vigorous organization." In this respect, he said, some costs, such as labor, salary and wages, that the Supreme Court had complicated the task of the District Court by failing to make it clear what findings the lower tribunal was expected to make. At this point a question arose as to the interpretation of certain parts of the proposed order, especially in regard to divestiture. John W. Davis of Loew's counsel argued against the Government's demand that the theatre-holding defendants be compelled to submit a compilation of ioint theatre ownerships in an attempt to establish which are legal and which illegal. He held that it was the Government's job to list ownerships considered to be illegal. "The Government," he said, "shouldn't shift the burden to the defendants to prove which are legal and which illegal." Holds Court Is 'Ministerial' It was Davis' contention that the statutory court, as presently constituted, was a "ministerial" one and could not determine judicial matters. Appearing for Warner Bros., Judge Joseph Proskauer argued that many of the issues in the Government's proposed order were so controversial they :ould not be ruled upon without a "ull court. Asserting there existed 'no practical need for any kind of nj unction," he assured the court the defendants would operate in accordMice with any ruling of the District "ourt until a final judgment in the :ase. That the Government's motion was 'unusual and unnecessary" and it was ip to the Department of Justice to lecide what attitude was to be taken by the defendants in further proceed having been set by bargaining, tend to become fixed "and are largely unresponsive to management efforts to effect a readjustment.'* Therefore, he said, continued effort must be made to eliminate waste in those areas in which the power to shape costs obtains, particularly in production activities. "If Paramount is to remain a major factor in production-distribution," Balaban said, "it is imperative that we make quality pictures at a cost which will permit their distribution at a profit." "I believe that inventory and cost control are the most important criteria of success or failure in our industry today," he said, observing that no one knows how long the present critical period will last. He said that Paramount reduced its inventory by approximately $2,400,000 last year and that current inventory is about the same as at the year end. Cash is down about $1,250,000, but bank debt has been reduced from $8,000,000 to $6,000,000, while $3,571,000 was applied to purchase of 166,000 shares of the company's stock this year. Seasonal Decline Is 'Prolonged' "In the second quarter," Balaban said, "we have been experiencing the same seasonal drop as occurred last year. It is more intense and appears to be more prolonged this year due, perhaps, to the wider variety of diversions which are now open to the public. The pictures which we will release during the second half are, on the whole, very good. If, as we expect, the levels of domestic theatre business for the second half of 1948 hold up reasonably well, they will serve to cushion the decline in film earnings and will enable us to strengthen further the foundations for profitable operations in productiondistribution," Balaban said. ings was the argument made by James F. Byrnes, appearing for 20th-Fox. A suggestion that the Government sit down with the defendants in an effort to "find out what it wants in a specific way" was presented to the court by Thomas Turner Cooke, who represented Universal. He said that a sweeping injunction against allegedly discriminatory practices would leave the industry open to charges of discrimination at every move, thereby proving a serious hindrance to the conduct of the business. Para. Reelection (Continued from page 1) gan, Henry Ginsberg, Leonard H. Goldenson and Paul Raibourn ; secretary, Robert H. O'Brien; treasurer, Fred Mohrhardt ; assistant secretaries, Jacob H. Karp, Frank Meyer and Russell Holman. Directors reelected include: Balaban, Stephen Callaghan, Freeman, Harvey D. Gibson, Goldenson, A. Conger Goodyear, Stanton Griffis, Duncan G. Harris, John D. Hertz, Keough, Earl I. McClintock, Maurice Newton, Reagan, E. V. Richards, Edwin L. Weisl and Zukor. 'Waltz' Time on WPIX Paramount became the first film company to make commercial use of the facilities of WPIX last night when the New York Daily Neivs television station started operations. The company purchased time to promote "The Emperor Waltz," which opens at the Music Hall here tomorrow. Balaban Optimistic Of Video in Future Television will offer the film industry many "plusses and minuses," Barney Balaban, Paramount president, told company stockholders at their annual meeting here yesterday. He said it is premature to predict any definite effects, but that on the whole he is "optimistic." Two matters were cited by Balaban as having an important bearing: on the company's expansion ir^Sfc television field. He listed theslP"j the preparatory judgment which the company has filed to determine whether the Federal Communications Commission has the right to limit any company to five television stations, and forthcoming hearings in Washington on whether Paramount controls DuMont. Balaban on British (Continued from page 1) said that the company could not pay the full costs in pounds sterling for the reason that American talent and personnel must be employed in England if the picture is to have American appeal as well as worldwide appeal, and to the extent that American components are used, costs must be paid in U. S. dollars. Balaban pointed out that the company's revenues were not actually affected by 'the recent 75 per cent British ad valorem tax because Paramount had a supply of pictures in England to which the tax did not apply. He added that the supply is not yet wholly exhausted. He said that consequently, while the terms of the British agreement "are more favorable than the British ad valorem tax, actual operating conditions during the time the tax was in effect, though temporary, were more favorable to us than the situation now is under the agreement." Reviewing the general foreign situation, Balaban reported the situation is "unchanged" since his last report. He said that it is still a "story of restrictive measures against the importation and showing of our films in foreign countries." FIVE -STAR DC6 FLAGSHIPS LOS ANGELES 11 hours, 10 minutes CHICAGO 3*4 hours Phone HAvemeyer 6-5000 or your travel agent Ticket Offices: Airlines Terminal Rockefeller Center • Hotel New Yorker 120 Broadway • Hotel St. George AMERICAN AIRLINES