Motion Picture Daily (Jul-Sep 1954)

VOL. 76. NO. 6 NEW YORK, U.S.A., FRIDAY, JULY 9, 1954 TEN CENTS 5 Theatres Get Show Cause Order Vs. NYC on 5% Tax Queens Houses Challenge Constitutionality Of Levy; Charge Rate Is Higher in Some Cases Than Law Allows; Hearing Monday The opening salvo in New York City exhibitors' fight to have the recently passed city five per cent amusement tax declared unconstitutional was filed yesterday as Supreme Court Justice Nicholas M. Pette signed an order requiring the City of New York, Robert F. Wagner, Mayor; Lawrence E. Gerosa, City Comptroller; and George M. Bragalini. Treasurer of the City of New York ; "to show cause" on Monday "why a temporary injunction should not be granted restraining and enjoining them from enforcing the provisions of the New York City admissions tax law." A hearing will be held in Supreme Court, Queens County, at 10:00 A.M., Monday, at which time it is believed the city will ask for a delay in the order. The "show cause" order was signed yesterday in connection with an action instituted by five New York City theatres. The action was submitted to the Supreme Court yesterday on behalf of RKO's Flushing Theatre, Flushing ; Loew's Willard Theatre in Jamaica ; Century Circuit's Community and Queens Theatres in Queens Village ; and Brandt's Strand Theatre in Astoria. They filed against the City of New York, the Mayor, the Comptroller and the Treasurer, "to have the New York City Admissions Tax Law," which has been in effect since July 1, "declared unconstitutional, illegal, in(Continued on page 6) Issue of Taxes on Trust Case Damages Goes to High Court WASHINGTON, July 8. — The government today asked the Supreme Court to decide whether exhibitors and others who win punitive damages in private anti-trust suits must pay Federal income taxes on those damages. The government appealed to the high court a decision of the Third Circuit Court of Appeals that William Goldman Theatres was not taxable on such damages. Goldman won an anti-trust suit against Warner Theatres and the major distributors, and was awarded $125,000 damages, trebled to $375,000. Goldman maintained that the first $125,000 represented lost profits and was taxable, but that the remaining $250,000 was not taxable. The Internal Revenue Service objected, but the tax court and the Third Circuit Court of Appeals upheld Goldman's stand. The lower courts based their action on a previous Supreme Court decision to the effect that taxable income consists of "gain derived from capital {Continued on page 6) Arbitration Group Meeting Here Today The eight-man joint exhibition-distribution drafting committee will meet for the first time in a luncheon meeting at the Harvard Club here today. The "sub-committee" is to draft a set of rules and regulations for arbitration for presentation and approval by the full sales managers committee of the MPAA and representatives of the Theatre Owners of America, Southern California Theatre Owners Association, Independent Theatre Owners Association and Metropolitan Motion Picture Theatre Owners Association. Allied States Association is not taking part in the arbitration proceedings. U.S. C 'Scope Installations Total 5,301 The number of Cinema Scope and stereophonic sound installations in the United States, as of June 26, totalled 5,301, with orders approximating 400 weekly, a checkup reveals. It is estimated that at the present rate of installation the figure will exceed the 15,000 mark by the end of the present year. A total of 3,236 theatres currently are equipped with the full four-track sound syste'ms, 138 are operating with "mixers," 232 are equipped for onetrack magnetic sound and 1,695 have one-track optical equipment. Of the U. S. houses equipped with the medium, 4,759 are in four-wall theatres, 519 are drive-ins and 23 are in military theatres. Equipment dealers, however, say {Continued on page 6) Stockholder's Suit Names 20th, Skouras, Zanuck, 3 Directors Listing a variety of charges, Rebecca G. Berkowitz, a 20th CenturyFox stockholder, yesterday filed suit in N. Y. Federal Court asking that the employment contracts of Darryl F. Zanuck, vice-president in charge of production, and Spyros Skouras, president, be declared null and void. Three directors also were named in the action ; namely, Daniel O. Hastings, L. Sherman Adams and Murray Silverstone, as well as the company itself. 'Conspiracies' Charged The plaintiff alleges that the three directors and Skouras control the actions of the board, causing 20th-Fox and its subsidiaries to engage in conspiracies to restrain trade and eliminate competition in the production, distribution and exhibition of pictures. These acts, Mrs. Berkowitz charges, have resulted in law suits totalling $400,000,000 which stemmed from carelessness in permitting certain transactions. The complaint states that because Skouras and his family hold an interest in Skouras Theatres, license agreements for houses of that circuit call for lower prices than those charged for competitive theatres. The plaintiff further claims that Skouras and his family have an interest in Joseph Bernhard Productions and Edward L. Alperson Productions, thereby giving them preferences on rental {Continued on page 6) RKO Theatres Cuts Outstanding Stock WASHINGTON, July 8.— RKO Theatres Corp., in a report to the Securities and Exchange Commission here, announced a decrease in the amount of securities outstanding for the month of June. In RKO's proxy statement dated April 9, 1954, the company reported there were 3,764,913 shares of its common stock outstanding, not including 150,000 shares held by the company. On June 30, 1954 there were 3,225,363 shares of RKO common outstanding, not including 689,550 shares held by the company, the report showed. In addition, RKO mailed to {Continued on page 6) TOA Unit Sponsors Makelim Meeting For the first time, a unit of the Theatre Owners of America will sponsor a meeting with Hal Makelim for the purpose of hearing his plan to produce a series of pictures under an exhibitor-participation agreement. The unit is the Theatre Owners of North and South Carolina and the session will be held in Charlotte at the Charlotte Hotel next Thursday. Previous exhibitor meetings with Makelim have been promoted by units of Allied States Association, although the conferences have been open to all exhibitors. It is reported that the Carolina meeting was called at Makelim's request. 'Scope in 3 Forms Available in August With the August release of "Broken Lance," all of 20th Century-Fox's past and future CinemaScope productions will be available to exhibitors for bookings with three different stereophonic sound tracks, fourtrack magnetic, one-track magnetic and one-track optical sound, it was learned here yesterday. Past 20th-Fox productions, beginning on June 19 with "The Robe," were made available by the company in one-track optical sound along with fourtrack magnetic sound. Columbia Dickers For Own Building Columbia Pictures is in the process of concluding a deal for the purchase of a seven-story office building at 55th Street and Fifth Avenue here. Ever since its formation as the CohnBrandt-Cohen Sales Corp. in 1924, the present-day Columbia has had its headquarters at 729 Seventh Avenue. The new location is occupied at this time by Mark Cross, leather dealers.