Motion Picture Daily (Oct-Dec 1948)

4 Motion Picture Daily Total Divorcement Out (Continued from page 1) to a master, the three-judge court began the new phase of the 10-year-old industry anti-trust suit hearings following the mid-day adjournment yesterday, with Wright introducing new exhibits pertaining to theatre ownership reports of the four companies. Attorneys for the latter immediately questioned the accuracy of the new exhibits. The court did not set a time limitation on the new phase of the hearings but has indicated that it will not countenance protracted testimony. A clue to the amount of time required by defendants may have been supplied by Joseph Proskauer, counsel for Warners, when he told the court that he could put in his new testimony "in four days and, if it is not met with serious objections, perhaps in one day." ... Counsel for other companies did not indicate how much time they might require but if their needs did not differ materially from those of Warners', the case might be concluded in 30 days or less. Hit Procedure on RKO Decree Yesterday's session began with the presentation by Wright of terms of the separate settlement with RKO. Objections to the RKO settlement were raised by United Artists counsel, Edward Raftery, and Louis D. Frohlich, attorney for Columbia, both questioning the procedure. Raftery also offered the point that the settlement might "affect others," presumably meaning it might be used in other anti-trust cases against the distributors. He added, "It may even prejudice this very trial." A new system of voluntary arbitration for the industry was discussed briefly by defendant attorneys with the indication that the subject in all likelihood will be taken up at length at a subsequent time. That Judge Hand would be agreeable to arbitration was made apparent by his comment that "I certainly think and always thought that there ought to be such a system." The position of the "Little Three" was voiced by Frohlich, Raftery and Cyril Landau, the latter for Universal. WANTED An experienced man or organization to handle complete releasing details of a I -reel theatrical short in color. Exploitation already covered. Call CI 5-8459 MITCHELL MAY, Jr. CO., INC. INSURANCE Specializing in requirements of the Motion Picture Industry 75 Maiden Lane, New York 510 W. 6th St., Los Angeles Frohlich branded the government's proposed trade practice injunctions an apparent attempt to " 'destroy' the industry." He said that the government-recommended judgment would open the distributors to "numerous contempt proceedings." Both he and Raftery again referred to private cases against the distributors throughout the country, saying that the present status of the New York case is being used by lawyers in support of private suits. Frohlich asked the court to consider its final decree in the light of other cases now pending and potential ones in the future, and to grant defendants protection from "ruinous" damage actions. Cites Dipson Trust Action Raftery cited the current Dipson Theatres action in Buffalo against the distributors when he, also, called attention to other suits. Landau made a bid for the right to ask modification of the final decree "once the effects of the conspiracy have been dissipated." Landau also hit the government's proposed provision on clearances which, he said, would mean that clearances would be justified only in instances of print shortages. John W. Davis, for Loew's, maintained that the U. S. Supreme Court "had in mind" further testimony in the case and said he was "prepared to challenge" evidence on closed towns and joint ownerships offered by the government. Proskauer argued that Warners development of its theatre holdings was motivated by the "need for new markets" and that monopoly was neither the intent nor the effect. He said that Warners for the most part built its circuit from 1928 to 1931 and characterized the acquisition of theatres at that time as "pioneering." He said only 14 houses were taken by Warner before 1928 and only a "small number subsequent to 1931." .'"What remedy should we give?" Judge Hand asked of Proskauer. "We were told our remedy was inadequate," he added, in a reference to the Supreme Court's opinion. "One remedy should not be divorcement," Proskauer answered. Scores D. of J. 'Inconsistencies' Whitney North Seymour, for Paramount, charged that the government in its proposals was offering the "same old argument." And he lashed out at what he called inconsistencies in the government's position basing this, in one instance on the 'government's bid for divorcement but its willingness to allow for new theatre acquisitions upon court approval. John Caskey, for 20th Century-Fox, announced to the court that he intended to show that no monopoly exists and said that the government is bent on obtaining divorcement without the further proof which, he said, is necessary. Caskey accompanied his oral argument with a memorandum to the court which concludes that 20th-Fox's "present method of selling — affording any exhibitor the opportunity to negotiate for pictures on any run he wants — renders the relief of divorcement and divestiture unnecessary." Caskey endorsed the objections to the government's proposals raised by the other defendants and expressed the desire of his company to "become a party to a nationwide arbitration system which will afford a speedy and inexpensive forum for the adjustments of disputes." Judge Hand remarked that both sides were taking "extreme" positions now and warned that "You won't get far with this court." While declaring that he did not think more testimony was needed — "What more can be added ?" — he corrected Wright when the latter charged the defendants were trying to delay the new hearings as "long as possible." "Their object is not to deter but to litigate certain questions," Judge Hand said. "I think they have a right to do that." Twice he remarked that intent in acquiring theatres, however innocent it might have been, "does not matter. More testimony on that is not needed. It's the effect of the acquisitions that matters," he said. Judge Hand observed that the Supreme Court decree "spells divorcement, not total divorcement but some divorcement." "Not without an inquiry," Seymour replied. "They wouldn't have remitted the case to you if they wanted divorcement," Proskauer remarked. RKO Decree (Continued from page 1) timony was taken in the industry case because, under the anti-trust laws, such a decree could not be used subsequently as prima facie evidence in treble damage actions which may be brought against the company later. The decree could be so used if it were entered after new testimony had been taken in the case. The court called a brief recess to consider the decree and at its end, Judge Augustus N. Hand, senior jurist, said : "Your decree has been read, and perhaps partially understood, and has been signed." RKO Counsel Leave Thereupon, Irvine, General William J. Donovan and Gordon Youngman, the RKO attorneys, arose and left the court room, while the seven other major defendant companies turned to the continuation of the hearings. Thus, the RKO consent decree has been approved by the court, the Department of Justice and the company's board of directors, as of now. It remains only to be approved by RKO stockholders, to whom it will be submitted at a meeting to be held within 90 days. Approval at the meeting is regarded as highly probable in view of the -fact that the theatre divestiture program on which the decree is based was conceived by Howard Hughes, who owns the controlling stock interest in RKO. To Set Up Two Companies The plan provides for division of RKO into two new stock companies, one for production-distribution, the other for theatre operation. The latter will have title to 80 wholly-owned RKO theatres and may acquire up to 30 other houses in which RKO now holds an interest. It must dispose of partial RKO interests in 241 other theatres within a year. RKO stockholders will receive shares in both new companies, but Hughes must dispose of his interest in one of the two within a year. The government does not care which one Hughes retains, but he already has indicated by granting an option to Atlas Corp., headed by Floyd Odium, to purchase his theatre company interest, which one he will dispose of. Depinet Pleased (Continued from page 1) decree is RKO's representation to til court that, subject to stockholder approval, it proposes voluntarily I divorce its exhibition business from 1 production and distribution busine! This will have far reaching and, I \ lieve, very beneficial effects on o future. Theatre Setup Indep' ~,*ent "In a short time our tSjy^'.t coi pany will commence operations as ; independent circuit. I believe t consent decree is the only way RK' can be assured of retaining substai tially all its so-called wholly-own theatres. It also has the right und the decree to acquire without furthi court approval certain additional the tres in which RKO and other e: hibitors presently have an intere;1 Our interest in the theatres which v must sell is in most cases that of minority stockholder and those the. tres are operated by others. In n judgment there will be no finer grot of theatres anywhere in the Unit( States than the RKO circuit. Trad tionally, our theatres have been sin cessful and their individual locatioi and the character of their operatic assure that they will continue to t strong competitors in every mark' in which they are located. "Our picture company has at a times successfully maintained its conpetitive position throughout areas i which it has no affiliated theatre: Historically, it has always held a plac of eminence in the industry and it reputation has been established by con sistent delivery of top quality pic tures. I have not the slightest doub that, operating separately, it will con tinue as one of the industry's mos reliable sources of high-grade product 'Only Way' to Retain Circuit "Fortunately, RKO has since its or ganization operated its theatres indei pendently of its production and dis tribution' business. We have had ; picture company and a theatre com pany and from an administrativi standpoint each has had its own management and staff. For that reasoi' the separation to be undertaken wjli for RKO be a relatively simple onei With each unit specializing in its owi field, I am confident that RKO Pictures and RKO Theatres will eaci: be leaders in the advancement and growth of motion picture entertainment." Coast Production Drops Slightly Hollywood, Nov. 8. — The production index dipped to 30 from last week's tally of 33. Six films were launched while nine were completed. Shooting started on "Jolson Sings Again," Columbia ; "Counselor at Gun-Law" (Equity), Eagle-Lion;' "Tuna Clipper," Monogram ; "Top o' the Morning," Paramount ; "Rolling Wheels," Screen Guild; "Champion" (Screen PJays), United Artists. Shooting was finished on "Stampede," Allied Artists; "The Mutineers" and "The Devil's Henchmen," Columbia; "The Barkleys of Broadway," Metro Goldwyn Mayer ; "Crashing Through," Monogram ; "El Paso" (Pine-Thomas), Paramount; "Stagecoach Kid," RKO Radio; "The Amboy Dukes," Universal-International ; "Flamingo Road," Warner.