Motion Picture Herald (July-Aug 1935)

July 2 7, 19 3 5 MOTION PICTURE HERALD 15 LOS ANGELES CLEARANCE SCHEDULE OFFERED AS MODEL TO OTHER AREAS Code Authority, Closing Its Books, Reports Plan Being Continued by Fox West Coast — Accepted by Independents General provisions of the schedule of clearance and zoning for the Los Angeles exchange territory, which were to have been made a part of systems for other areas had not the supreme court invalidated the NRA, now are offered by members of the Code Authority, closing its books this week, as a model for sectors which may desire to draft clearance agreements. (Complete text of the general provisions of the Los Angeles schedule appears on the following pages). The Authority regards the Los Angeles plan as the only tangible result of two years of striving toward self-regulation under a code of fair practice and of more than a year's actual effort toward evolving a set of clearance and zoning rules that would be equitable, workable and acceptable. The Los Angeles schedule entailed a tremendous amount of work, and in its final form is the consummation of a long series of conferences harmonizing the ideas of conflicting local interests and conforming local recommendations with the thoughts of the Code Authority. Five drafts were prepared before one finally was approved by the national board, and that was revised by the Authority before it went into effect. FWC Continues Plan After an initial test of two months, the plan is being continued voluntarily by Fox West Coast with one or two exceptions, and it also is reported to be working out to the satisfaction of a majority of independents. By realigning availability, the schedule has had the eifect of increasing admission scales to a level commensurate with draw possibilities, and hence has jumped theatre revenue to a point where many exhibitors are showing a profit for the first time in several years. This, in turn, it is reported in New York, has increased distributors' income by several hundred thousands of dollars for the year, through the higher rentals which the exhibitors are able to pay. Many subsequent runs in the Los Angeles sector which charged an admission of 15 or 20 cents have increased the tariff to 40 cents, because the schedule drastically sets back lowprice houses in product availability. Besides Los Angeles, the schedule is for the territory comprising southern California, Arizona, Nevada and New Mexico, embracing 214 cities and towns and affecting 450 exhibitors. Local Board Precedents Followed Generally throughout the country, clearance and zoning prevails, as far as legally and practically possible, in accordance with the precedents established through decisions of the local boards in hearing individual complaints and the decisions and principles laid down by the Code Authority. The usual dominant values — -such as admission price, class of theatre and locality— still control, and there are no limitations, with the single exception that the distributors are continuing the cardinal principle promulgated by the Code Authority — that clearance is governed by the exhibitor's ability to bargain for product. In other words, while availability may be regulated by the admission price, the clearance in individual zones is a matter of buying power. While the national situation is reported tranquil and is expected to continue so for a few months, it is anticipated that clearance and zoning again will come to the fore as a controversial issue early next year when the large circuits begin to negotiate new season contracts. The amount of protection a distributor is willing to grant a dominant circuit usually has a definite bearing on product deals, and the circuits not infrequently use this point to play one distributor against another. It is when exhibitors in the field begin to discuss the drafting of clearknce and zoning plans that the general provisions in the Los Angeles document will prove their usefulness, believe members of the retired Code Authority. General Provisions as Basis Not all the general provisions may actually square with all local conditions, but the proponents believe they are broad enough and reasonable enough to cover practically all situations. They were designed as the foundation, and the local interests were to work from there. It is provided that the run a theatre shall have is "solely a matter of negotiation" between the theatre and distributor. A "continued first-run" is defined as one that upon its closing in one theatre is without lapse of time continued in another theatre having the same admission scale, within the same city, town or zone. The clearance is figured from the end of the run in the theatre last exhibiting the picture. As to clearance within a zone, any subsequent-run theatre is permitted seven days' clearance over the next subsequent-run in every competitive theatre within the same zone. To obtain this clearance, a theatre must complete the run within 14 days after availability or within 14 days of the first date of exhibition. If these conditions are not fulfilled, the sevenday period of clearance is shortened commensurately. Competition Defined All theatres within a subsequent-run zone are deemed competitive, except those specifically designated as non-competitive, and no distributor is entitled to grant any clearance over noncompetitive theatres. No clearance is permitted for any theatre outside of a particular zone. Admission prices, for the purpose of the schedule, shall be the net charge, exclusive of taxes or other fees. Theatres are classified according to admission price, and it is provided that a theatre charging 40 cents or more as evening adult admission and not less than 30 cents matinee adult admission, is classified as a "forty cent or more theatre." Similar definitions range down to theatres charging less than 10 cents for anyone at any time, which are classified as "five cent theatres." It is stipulated further that if a theatre lowers its price its classification shall be changed, even though lower admissions are practiced as a temporary measure, and its date of availability is set back for at least four weeks folloying the week in which the theatre's classification is placed in a lower bracket. In order to gain the benefits of a higher admission, the Admissions Reported Increased Under Plan with Exhibitors Showing Profit and Distributors Greater Rentals as Result exhibitor must have the distributor's consent in writing to be placed in the higher category. However, the exhibitor is not prevented from increasing his price at his own will. Can Purchase Any Run Regardless of admission price, the exhibitor is given the right to purchase any run he may be able to buy in his zone, and the distributor is privileged to sell his product to any theatre for any run. The general provisions conclude with a section specifying that nothing in the schedule shall be construed as obligating the distributor to have available a greater number of feature prints than was generally carried prior to adoption of the schedule, and that all dates of availability and their allocation to exhibitors remain at the discretion of distributors. After a period of voluntary observance in principle by the exchanges during the time the schedule for Los Angeles was being drafted, the completed and approved plan legally went into effect May l5th. However, there was to be a 28-day interval before it would affect the first subsequent-runs, and the supreme court's NRA decision was handed down May 27, before the schedule could be practically enforced or officially published. Made to Fit Code The Los Angeles schedule was made to fit the NRA code, the Code Authority's rulings and the 12 principles enunciated by the Authority last September for guidance of local boards in the preparation of clearance and zoning rules. In a word, the schedule sets down for the first time all the procedure and decisions under the code as defined, refined and crystallized at the time the Blue Eagle was nullified. The restrictions imposed by the Code Authority no longer hold, of course, Including the one specifying that "the period of clearance shall not be affected by reason of any theatres using a double bill policy or stage shows." The distributors now can freely Indulge In contractual clauses penalizing the showing of dual features, or anything else not specifically prohibited by law or court decisions. As probably an afterthought to the general provisions, the Code Authority inserted a clause in the preface to the schedule to the effect that the local board should make such reasonable reduction of clearance as might be proper in the event of a reduction in admission prices by any first-run theatre. This, it is generally conceded, would have solved the problem of low admission prices at first-runs as obtains in Kansas City and some other key cities. The Kansas City clearance and zoning board had approved this measure and asked the Code Authority to make it a part of the contemplated schedule for that territon,'. After conferences with exhibitor factors in Kansas City and a survey of tlie theatre situation there, John C. Flinn, executive secretary of the Code Authority, reported to the board that the midwest center had one of the worst clearance and zoning situations in the countr>% (^Continued on follo'u".iio /'a.oc. column 3)