Motion Picture Daily (Oct-Dec 1955)

Tuesday, December 6, 1955 Motion Picture Daily 9 Court Dismisses 16mm. Anti-Trust Suit Filed July 22, 1952 Justice Department's Action Commenced Over 3 Years Ago It was on July 22, 1952, that the Department of Justice filed its anti-trust suit designed to force the major companies to sell their 16mm. prints to television. Named as defendants were six producer-distributors, their 16mm. distributors, and two independent 16mm. distributors, with Theatre Owners of America named as a co-conspirator, but not as a defendant. On Feb. 9, 1955, the government asked for and received court permission to include Independent Theatre Owners Association, Metropolitan Motion Picture Theatres Association, Allied States Association, Southern California Theatre Owners Association, Pacific Coast Conference of Independent Theatre Owners and the Council of Motion Picture Organizations, as co-conspirators in the antitrust action. Specifically, the complaint charged that the defendants and co-conspirators conspired continuously since 1945, and for some years prior to that tinue, to prevent the exhibition of 16mm. feature films in competition with established film theatres. In summary, the Justice Department demanded that there be no restrictions on showing of 16mm. films on television, no limitations on showing 16mm. films by enterprises competing with regular theatres, no "arbitrary and excessive" clearances between first 35mm. theatre release of a picture and its release on 16mm., and tiiat 16mm. films be licensed to coin-operated machines in taverns, etc., and for free shows by merchants. The case went to trial in Los Angeles before Federal Judge Yankwich on Sept. 23 of this year and was brought to a conclusion on Nov. 9. Two weeks before the anti-trust suit went to trial, Republic Pictures, one of the defendants, agreed to a consent judgment in the government's 16mm. suit. The judgment required Republic to make available to television most of the films shown earlier in theatres. The film company had to offer within 90 days to license for TV 80 per cent of the feature films available for TV produced prior to Aug. 1, 1948, and released for 35mm. national theatre exhibition. The judgment also required Republic to undertake negotiations looking toward making a majority of its feature films produced after Aug. 1, 1948, also available to television. Within two years after these negotiations are completed successfully, Republic would be required to offer for license at least 25 per cent of its feature films three years after they were released for national theatre exhibition. In each calendar year thereafter, Republic, under the judgment, would have to offer for license for TV at least 50 per cent of the films released by it three years earlier for 35mm. theatre distribution. During each calendar year, Republic also would be required to offer for licensing to 16mm. outlets other than TV 80 per, cent of the feature films available for 16mm. exhibition two years after these films were released for dieatre showing. Exhibitors in 'Gadfly' Role, Yankwich Says (Continued from page 1) titled diem to regard today's decision as pertaining to them also. During the trial 700 exhibits were placed in evidence. In the pre-trial preparation the government had required defendant companies to answer complicated interrogatories covering every transaction in 16mm. films since the manufacture of 16mm. prints began, in some instances as far back as 1928. Defense attorneys estimated unofficially, during the trial, that pre-trial costs alone aggregated more than $1,000,000. Testimony at the trial filled 4,000 pages. Widely Welcomed Despite the fact that the government's charge had long been regarded here as "born of fuzzy beaurocratic thinking that flouts economic reality," to quote defense attorney Macklin Fleming, the news that today's decision was a 100 per cent victory for the defense was greeted with enthusiasm by executives in defendant companies, as well as by non-defendants, both for industry's own sake, in point of prestige, and because the decision clears way for all parties— in television as in theatrical production— to plan definitely for the future as regards television use of Glms made originally for theatre exhibition. The government complaint had named Theatre Owners of America, Allied States Association, the Council of Motion Picture Organizations, Southern California Theater Owners Association, Metropolitan Theatre Republic Can File To Exit Judgment Under a "favored nation" clause in its consent decree in the U. S. Government's 16mm. anti-trust suit, which was dismissed in Los Angeles yesterday, Republic Pictures is allowed to file application within 30 days seeking exit from the judgment in as much as Judge Yankwich's ruling is more favorable than the Sept. 13 agreement. Article IX of the Republic consent decree, in summary, states that the film company is entitled to make application to the U. S. District Court for Southern California, with 30 days' notice to the plaintiff, for a modification of the consent decree as a final judgment pertaining to the case if more favorable in respect to the other defendants than the consent decree. Owners and other exhibitor organizations as co-conspirators, and government counsel had examined the organizations' files in search of evidence, but they were not named as defendants. In his decision, Judge Yankwich took occasion to point out that these organizations had acted as "gadfly" to the defendants, urging them to tighten restrictions, rather dian as fellow-offenders. TV Factor Uppermost In the original complaint the government had indicated it was bringing suit because theatreless towns, churches, roadshowmen (meaning itinerants ) and television stations were being denied the use of 16mm. features, but when the trial got under way most of the testimony narrowed down to TV's position in the matter. Judge Yankwich's opinion, running to 30,000 words, is summed up more succinctly in the formal language of his "decision and directions for findings," which reads in part: "Upon the grounds and for the reasons set forth in the opinion filed this day, judgment will be in favor of the defendants that the plaintifl take nothing by the complaint against them or any of them, and that the injunction and other relief prayed for therein be denied. No Conspiracy Found "The court finds that the defendants have not contracted, combined or conspired among themselves or with any of their co-conspirators, whether sued in this action or not, or others, to violate Section One of the Sherman Anti-Trust Act and/or to restrain interstate trade and commerce in 16 millimeter feature films in violation of Section One of said Sherman Anti-Trust Act. "More particularly, the court finds that the defendants have not, pursuant to, and in furtherance of, any conspiracy or in violation of any of the laws of the United States, done or committed any of the acts set forth in the complaint. "The court finds that each of the defendant-producers imposed time and territorial restrictions as to the exhibition of 16mm. films as appears Policies Not Unreasonable, Court Holds from the testimony outlined in the opinion and the charts listed under subdivision 6-D of the opinion. "These restrictions were arrived at separately and independently by each of the defendant-producers as the result of identical situations confronting them and were motivated by the desire of each of the defendant-producers to protect its income derived chiefly from standard film exhibitions at admission-charging theatres. Holds TV Was Aided "The court finds that there has been no refusal by the defendant-producers to exhibit to television. On the contrary, the defendant-producers have, at various times, released 16mm. films to television. There has been reluctance on the part of the defendant-producers to release motion pictures generally to television because of ( 1 ) the possible effect of their exhibition on standard pictures in admission-charging motion picture theatres; (2) the damage that the exhibition through television and otherwise, of 16mm. films might have on the re-issue and remaking of motion pictures now in the vault of the defendant-producers; (3) the destruction of the value of stories from which the pictures and backlog were made and the rights to which belong to the defendant-producers; (4) the inadequacy of the prices offered by television and any other exhibition of 16mm. versions as contrasted with the income derived from the exhibition of the standard versions of films. "Each of the defendant-producers for itself administered in its own way (Continued on page 12) Judge Yankwich Sees No 'Duty9 to Supply TV From THE DAILY Bureau LOS ANGELES, Dec. 5. Key language in Judge Leon Yankwich ruling on TV in his dismissal of the 16mm. anti-trust suit reads in part: "The government has characterized the entire policy of producers as to 16mm. distribution as a 'boycott' against certain types of exhibition. 1 cannot agree, nor can I agree with the Government's contention that it is the duty of producers to supply TV with entertainment material which it needs. It is not the function of a private industry to supply its product to a newly-arisen customer who is also a competitor and jeopardize its interest in the continued existence of its old customers for whom the standard product is primarily made."