Motion Picture Herald (Sep-Oct 1937)

28 MOTION PICTURE HERALD September 25, 1937 DALLAS SUIT ANOTHER Anti Trust Violation Charged to Interstate Circuit; California 'Showdown' Promised The sustained interest of the federal government in possible violations of the Clayton and Sherman anti-trust laws in the motion picture industry resulted this week in the opening of a Department of Justice suit against Interstate Circuit and large distributors in Dallas, and a promise by the Department of a "showdown" on California independent exhibitor complaints of unfair trade practices of Fox West Coast circuit and distributors in that territory. Charges Conspiracy Opening of the Dallas action brought charges from B. W. Henderson, special prosecutor of the attorney general's office, that Interstate had the largest number of first-run pictures as a result of a conspiracy entered into between the circuit and distributors. He also declared the conspiracy gave Interstate the largest dollar volume of business. "The companies proposed to clinch the business of first run Class A pictures at 40 cents, with subsequent runs at 25 cents for all theatres in the district," Mr. Henderson said. "The agreement made still exists." In addition to the charge of the fixing of admission prices of subsequent-run houses, the action also attacks anti-double feature provisions in the distributors' contracts. Under the contracts, distributors agree not to sell any product, which has played certain Interstate houses at a specified admission, to any other theatre which does not maintain a specified minimum. Colonel H. A. Cole, president of Allied States Association of Motion Picture Exhibitors of Texas, on the stand Tuesday as a Government witness, said his organization had been a factor in bringing the federal suit against the circuit and the distributors. He told the court he had gone to Karl Hoblitzelle, president of Interstate, to protest the contract provision holding second run pictures at 25 cents. He quoted Mr. Hoblitzelle as saying that he wanted to help exhibitors, but the witness testified he had insisted the contract would work a hardship on small operators who wanted to charge 10 and 15 cents. George S. Wright, chief of several attorneys for the defendants, saw the right of the owner of a copyright to defend its value challenged in this case. He said Mr. Hoblitzelle and E. J. O'Connell had saved the Interstate theatres from bankruptcy and asserted, too, that the operation of the circuit left room for competition. The Government, in outlining its case, charged the companies were operated under a monopoly and in restraint of trade. "Showdown" in California In announcing the "showdown" on complaints filed by independent exhibitors in California, Harold J. Law, special assistant attorney general, declared: "Two special Federal Bureau of Investi STARTED, THREATENED gation agents and four accountants will aid us in the investigation which will either prove the falsity of the charges or result in grand jury action." The audit, Mr. Law said, will take several weeks. Fox West Coast, Universal, United Artists, Paramount, Warner Brothers, Metro-Goldwyn-TVlayer, Twentieth CenturyFox, RKO Radio, and Columbia have all agreed to give investigators full access to the books, he said. Mr. Law also revealed that two consent decrees have been entered against Fox West Coast, but added that exhibitors still contend that violations exist. After the audit is taken, the findings will be summarized and then the course of action to be followed will be decided upon, Mr. Law said. Mr. Law recently arrived in Los Angeles from Washington with Harold Collins, of the Department of Justice. United Press, in a dispatch from Hollywood, quoted Mr. Law as stating that he would install seven assistants in an office and would either put the case before the federal grand jury or give major operators "a clean bill of health." National Decency Legion Classifies 14 Productions Of 14 new pictures reviewed and classified by the National Legion of Decency in its listing for the current week nine were approved for general patronage, three were listed as unobjectionable for adults and two were cited as objectionable in part. The new pictures and their classification follow. Class A-l, Unobjectionable for General Patronage: "All Over Town," "Escape by Night," "Las Quatro Miltas," "My Dear Miss Aldrich," "Mystery Range," "Roaring Guns," "She Asked For It," "Sudden Bill Dorn," "Western Gold." Class A-2, Unobjectionable for Adults: "Stage Door," "Susanne in Bade," "Wenn Frauen Schweigen." Class B, Objectionable in Part: "Wine, Women and Horses," "Wife, Doctor and Nurse." Alperson Sees World Distribution for GN Grand National will have world wide distribution for the coming season with the closing of several deals pending, Edward L. Alperson, president, said in New York Wednesday on his arrival from the Coast. "Sales of Grand National product both here and abroad are expected to gross in excess of $12,000,000 for the 1937-38 season," he said. Mr. Alperson came east to attend the opening of "Something to Sing About." KAO Declares Dividend The Board of Directors of Keith-AlbeeOrpheum Corporation declared a dividend, out of capital surplus, of $1.75 per share on the 7 per cent Cumulative Convertible Preferred Stock of the Corporation for the quarter ended March 31, 1934, payable on October 1, 1937, to the holders of record of the stock at the close of business on September 27, 1937. Two File Stock Changes; Court Hits Consolidated The Securities and Exchange Commission in Washington this week received a stock registration certificate from International Cinema, Inc., of California and a notice of stock changes in Universal Corporation, the while changes in Consolidated Film Industries' capital structure were prevented as a result of a court ruling in Wilmington, Del. Plans for the issuance of 50,000 shares of class A and 100,000 shares of common stock were disclosed by International Cinema, Inc., Los Angeles, in a registration statement filed with the SEC last Friday. International's Hollywood laboratory this week became the California branch of P'athe. The registration statement showed that the highest salary paid by International Cinema last year was $6,500, that amount being received by G. P. Regan, president, also by Bonar Russell, vice-president and general manager ; A. C. Snyder, secretary-treasurer, and A. J. Guerin, laboratory manager. Strengthening of Universal Corporation's holdings in Universal Pictures was reported by the SEC last week in its semi-monthly summary. The commission reported that during July, Universal Corporation acquired 180 shares of Universal Pictures first preferred and, at the close of the month, held 228,927 shares of common, 220 shares of first preferred and 20,000 shares of second preferred. Consolidated Film Amendment A proposed amendment to the certificate of incorporation of Consolidated Film Industries, Inc., was declared null and void in an opinion handed down by Chancellor Josiah O. Wolcott in the Chancery Court at Wilmington, Del., last week. A permanent injunction against the proposed amendment was granted. The opinion was filed in an action instituted by Norman Johnson of New York City, a preferred stockholder. The corporation was upheld in all phases of the complaint excepting on the objection to the company's proposal to cancel at least a portion of the accrued and unpaid dividends on the old preferred stock in an exchange for new stock, in the Chancellor's opinion. Consolidated appealed to the Supreme Court at Dover after an adverse decision once before, the court upholding the Chancellor and sending the case back for final hearing. Chancellor Wolcott declared that the amendment had been approved by the requisite vote of the stockholders, but because of the preliminary injunction issued in this cause it had not yet been effectuated by a filing and recording as required by law. The proposed amendment would have increased the preferred stock from 400,000 shares to 500,000 shares ; accumulated dividends on preferred had been reduced from $2 to $1 a share ; the preferred would have been entitled to one-half of all the dividends declared in excess of accumulative dividends ; preferred would be subject to redemption at $28 per share plus all accumulative and unpaid dividends ; upon voluntary dissolution holders of preferred would have been entitled to a returnative distributional assets up to $28 per share plus accumulative and unpaid dividends^ It was also proposed under the amendment to make it possible to exchange one and onequarter shares of the new participating capital stock and one-quarter share of the new common stock for one share of the preferred participating stock and to exchange two-thirds of a share of the new common stock for one share of common stock.