Motion Picture Daily (Jul-Sep 1956)

.day, July 30, 1956 Motion Picture Daily Opposes Gov't Involvement in Film Industry [joints to 'Big, fetter Films' As the Solution i (Continued from page 4) Me emergencies or unusual circumte;es that such right can be legitiQij?ly curtailed. Recognizing the expel e plight of thousands of exhibitors hughout the nation, die committee M, nonetheless, that the demand oi)ne-way film rental arbitration is tijalistic and its effect could well lo so change the entire industry Sjo only increase the exhibitors' iri lems. Wants Changes Studied First the TOA-Allied request for per■ion for divorced circuits to enter iluction with preemptive rights, ■committee admitted that "serious ttition must be given to any proiB|ls which would increase the supbof pictures. Care must be taken, 0 sver, to consider changes in the m of being fair to all segments of Industry so no one is put in a pre■ d position. The proposal of Ale/and TOA does not, in the com«j;e's opinion, provide an equitable — i Inators who served on the Senate ml Business Committee which tailed down a 91-page report on h industry operations include John . larkman, Russel B. Long, Hubert LSumphrey (who serves as chairis of the sub-committee on retailU George A. Smathers, John F. fpedy, James O. Eastland, Wayne lids, Edward J. Thye, Leverett •install, Andrew F. Schoeppel, »js H. Duff and Barry Goldwater. 01 ion. Under it the divorced error, would be permitted to integrate Ae at least three of the major disri itors-producers would continue to ■bstricted as to entering the exhibiI field. w.e committee said it looks with disW upon Allied's proposed legislakijfor government regulation of film B(ils. "Such regulation," the report H "is not in accord with our ecoBjic system; legislation has only e| applied in regard to industries W h by their very nature are restrictQ[n terms of competition such as leric power, telephone service and Bike. The motion picture industry, 0| not fall into this category. Spurns SCTOA Suggestion j rejecting SCTOA's proposal for ir trade practices commission to )t and enforce rules of fair cornion in the industry, the committee this proposal with film is in a 3 similar to the Allied suggestion it would call upon the Federal jrnment to involve itself directly ie motion picture business. The committee does not feel that a commission is called for; the problems within the industry can be more easily handled and settled by the exhibitors and distributors." The report said that while the profits of producers and distributors are not what they were "in the lush days of ten years ago, film companies are still doing very well." The Senators noted that film companies have decided that the only way to get the peorjle away from tv sets and into the theatres is to make "bigger and better pictures," and that this means "asstronomically" higher costs of production and distribution. The reasons for continued "substantial" profits by producers and distributors, the report said, are the increase in the foreign market, production of films for television, and the sale of older pictures for tv showing. The report said the sale of theatres forced by the Paramount decree "just when tv was becoming important may very well have been a blessing in disguise for the majors." Film sales to tv, the Senators said, "cannot help but hurt the small exhibitors. The public is not going to be easily moved to go to the movies when classics can be seen in one's own home free of charge." Turning to an examination of the specific complaints of exhibitors, the Senators indicated they doubted that the curtailment of film output was a deliberate scheme to force film rentals up. Instead, they said, the explanation lies more in Hollywood's feeling that big expensive productions have a better chance of box-office success. The report also stated that the basic reason for the rise in film rentals has been the mounting percentages demanded on the better pictures, but added that widespread use of competitive bidding was also a reason. Discusses Special Handling With respect to special handling, the report noted that "pictures are not marketed in the same mianner as cars or drug products" and that "the film companies must take into consideration what method will realize for them the largest receipts." It said there can be no doubt that special handling is a special burden on subsequent-run and small-town exhibitors, and that while it does increase the playoff period in an area, "there is no reason to believe that many pictures today are being played off too quickly, thereby cutting down on theatre attendance." Sees Word-of-Mouth Vital The committee said faster playoff of pictures and the increase in multiple showings "limits the public in its choice of pictures, because so many subsequent-run theatres play the same movie at the same time. Not only is there a resulting loss of patronage, but with several theatres in an area showing the same pictures at once the attendance at each is cut down. Faster playoffs have reduced the valuable word-of-mouith advertising which is so important to a picture's success; by the time many potential customers hear about a particular movie it has already played and gone in their oommunity. This pattern of distribution exists because many exhibitors have had their run position moved up to that of their competitors and clearances have been reduced and in many cases eliminated." The committee suggested that the industry study what effect this has had on theatre attendance and what possible changes can be made that would still assure equal treatment to all exhibitors. Assuming special handling does mean less business for small exhibitors, there still remains the question of what can be done about it, the report said. "The committee does not hold to the position that distributors are resorting to illegal clearance in their special handling of pictures," the report said. It noted that the Paramount judgments defined clearance as agreements between distributors and exhibitors, and said special handling was a unilateral decision by the distributor. 'Little Difference' As a practical matter, however, the committee continued, there is little difference so far as subsequentrun exhibitors are concerned between a bilateral agreement as to clearance and a distributor's unilateral decision to withhold a picture after the first engagement until he sees fit to release it generally. Use of many new film processes entailing special projection and sound equipment poses a major problem for small exhibitors, the report said. If the producers make more and more films that can be shown only in a few large theatres, "it could mean disaster for the small local theatres and turn the motion picture industry into truly 'class' entertainment," the report said. The Senators declared they didn't want to discourage improved film-making "but the committee does feel very strongly the film companies have a responsibility to continue to make their pictures available in standard size prints." Defends Justice Department Taking up Allied charges against Justice, the Senators said that since they themselves felt there was nothing illegal about special handling, they couldn't agree with Allied's complaints on this soore. They dwelt at greater length on Allied's complaint that the department refused to rule illegal the practice of distributors in asking exhibitors what price they intend to charge on films for which they're bidding. The report said "the committee believes a distributor has a legitimate interest in asking what the price will be." It admitted this system might make it easy for the distributor and exhibitor Cites Need for All Branches To Cooperate to agree as to the price and thereby engage in illegal price-fixing, but said "such danger does not make the system itself necessarily illegal." Even if distributors are forcing admission prices up, "the question remains whether this is illegal," the report said. It noted that if distributors are acting illegally in special handling of films and in asking for admission prices in bid situations, exhibitors could bring suits for treble damages. The committee conceded that exhibitors had a right to expect the Justice Department to give long advance notice when divorced circuits are seeking to acquire theatres, and urged the department not only to give advance notice in the .trade press but also to send letter notices to the exhibitors in the areas affected. Pleads for Theatres The entire report ooncluded with a section headed "need for cooperation." This declared: "The small independently owned motion picture theatres are an important institution in thousands of communities throughout the country. They offer to millions of men, women and children economical and wholesome entertainment. They represent sizeable investment in capital and offer employment to tens of thousands of people. Despite the growth of television, the public still enjoys motion pictures; the large box office returns of top pictures in recent years proves this point. The smaller theatres can and should continue to play a significant role in the motion picture industry." Goldenson Still Supports Production By Circuits In spite of the recommendations of the Senate Small Business Committee on industry trade practices, the Department of Justice should allow divorced circuits to engage in film production as means of providing more product to theatres, Leonard H. Goldenson, president of American BroadcastingParamount Theatres, said here at the weekend. He also noted that the Humphrey report "was pessimistic concerning film rentals." He said that in order to bring about a more fair approach to the film rental problem, there must be more pictures and a way to get more product is to have divorced circuits engage in film production. "I am sure that the Department of Justice is cognizant of this," he added.