Motion Picture Herald (Mar-Apr 1940)

March 2, 19 40 MOTION PICTURE HERALD 27 MORE INDEPENDENTS SUE MAJORS; NEW ANSWERS FILED IN U. S. SUIT Distributors Take Advantage of Clause Calling Upon Government to Keep Production Data Secret The large company defendants in the Federal Government's "key" anti-trust suit in New York, by which the United States seeks to divorce exhibition from distribution, end Hollywood's talent pool and revise industry practices, are moving along in providing the Department of Justice with answers to the many interrogatories which the Government asked the federal court of New York to order submitted. The Department of Justice Wednesday served notice that it was applying for an injunction to restrain the distributor defendants from possible attempts to "intimidate and coerce" any witnesses in the Government's New York suit in equity. The application will be heard March 5th. The motion cites possible "dangers" of pressure on exhibitor witnesses by the defendants and was accompanied by supporting affidavits signed by Col. H. A. Cole, Nathan Yamins, and Joseph Conway, a member of Allied of eastern Pennsylvania. Answers Filed Answers to the first 24 of the Government's interrogatories dealing with financial structure of the companies and their affiliates were filed this week by Paramount and Twentieth Century-Fox. Last week, as previously detailed, RKO, United Artists, Warner Brothers and Columbia filed their answers to the first 24 questions. On Saturday Paramount, Warner Brothers, Twentieth Century-Fox and MetroGoldwyn-Mayer filed answers to the questions numbered from 25 to 39 which refer to production activity. These companies, as well as RKO, Columbia and Universal, took advantage of the confidential clause and will insist that the Government keep secret the production data revealed. All the answers are due by Friday, as well as the Government's replies to the questions proposed by the majors. Both sets of answers may be subject to an appraisal by the federal court if they fail to provide the information sought by the defendants and the Government. Columbia Gets Until March 8th Columbia on Monday was given until next Friday, March 8th, to file its objections to the Government's interrogatories. On the same day the Government is scheduled to file its counter objections to Columbia's interrogatories. Steve Hannagan's office, which is handling the publicity on the majors' defense of the suit brought by the Government, said that no decision would be reached on releasing the text of the film companies' answers until Friday. At that time it is expected that all answers, except those the companies want kept confidential, will be revealed. It was said that the central legal committee does not even know all the answers. On the first set of 24 questions, answers were given to all by Twentieth Century-Fox but Paramount treated 11 of these as confidential in nature. Paramount did not wish to reveal its answers to questions dealing with profits, grosses and financial obligations. Stockholders Listed Twentieth Century-Fox answers said that the company had no outstanding indebtedness and no current loans. A complete list of stockholders was given. The common stockholders list ANTI-TRUST COMPLAINTS REACH RECORD NUMBER Wendell Berge, special assistant attorney general and right hand man to Thurman Arnold, said in New York last Wednesday that "there has never been a time in history when so many complaints of anti-trust violation as now have poured in on the Department of Justice." Although Mr. Berge did not specifically mention the motion picture business, it is one of those away out front in the number of cases pending — more than 40 — as filed both by the U. S. Government and independent theatre owners. Most of the complaints are coming from business men themselves, Mr. Berge said. He told the American Paper and Pulp Association that "vigorous enforcement of the anti-trust laws can do a great deal to curb the subversive activities of those men who through associations or otherwise are set upon a course destructive to real competition." was headed by the following : Chase National Bank, 221,157 shares; General Theatres Equipment Corporation, 185,000 shares; William Goetz, 184,642 shares ; Darryl F. Zanuck, 122,129 shares, and Joseph M. Schenck, 112,542 shares. The three largest holders of preferred stock were listed as the Chase National Bank, 487,215 shares ; William Goetz, 55,283, and Joseph M. Schenck, 26,983. The answers showed that Twentieth CenturyFox owns 42 per cent of the stock of National Theatres Corporation, having 756,000 shares. The company has 59,889 of the 60,000 shares of preferred stock in Movietonews, Inc. The company is the sole owner of Twentieth Century Fox Corporation of Texas and Twentieth Century-Fox Distributing Corporation. Profits and Loss Twentieth Century-Fox showed its total gross, distribution and production gross, revenue from exhibition companies and net profits and gross and net of subsidiaries for the years from 1935 through 1938, as are shown in the table on the following page. Movietonews each year showed a substantial loss and the Distributing Company each year a small gain. The net profits in the years covered ranged from $2,921,897 in 1935 to a high for the period of $8,212,535 in 1937. Paramount Shows Indebtedness Paramount listed a fixed indebtedness of $7,302,000, which represents a reduction from $11,133,200, the answers point out. The following creditors were listed who have placed directors on the Paramount board : Harvey D. Gibson, representing the Manufacturer's Trust Company, holding $3,000,000 of Paramount debentures; Stephen Callagan of the Allied Owners Corporation, $250,000 in debentures, and Maurice Newton of the Adams Express Corporation, 40,000 shares of preferred stock, $103,000 in debentures personally held and $125,000 debentures held as trustee. Hollingsworth Charges Product Was Denied Him After He Had Taken Over Lease at Beatrice, Neb. The independents this week scored again in two more federal court anti-trust suits against the majors, with the filing of a tripledamage claim for $234,300 by Frank E. Hollingsworth, at Lincoln, Nebraska, and one for $300,000 by the Netcong theatre in Netcong, New Jersey. In quite an important matter pending, the majors won a point over the Government, in their petitions for bills of particular from the Department of Justice, in a Nashville case. Calls $78,100 Actual Damages Claiming it will take $78,100 to satisfy actual damages inflicted upon his theatre operations in Beatrice, Neb., and which he seeks in triplicate, $234,300, Frank E. Hollingsworth entered his anti-trust filing on the docket of the federal court in Lincoln, Neb., last Friday. Defendants are the Fox Beatrice Theatre Corp., Fox Midwest, and Loew's, RKO, 20th Century-Fox, Universal, United Artists, Paramount and Republic, with the 20th-Fox manager Joe E. Scott, MGM manager Harry Shumow, and Republic manager Carl Reese, named as individuals. Mr. Hollingsworth claims Fox Midwest entered into a conspiracy with the distributor defendants, got them to promise to deliver him film if he would take over the lease on the New Pix, which Fox Midwest had dropped in a rental dispute After leasing it for five years at $18,000 rental, he spent $16,000 on equipment, and opened Oct. 23, 1939. He then claims, operating at a loss of $3,150 up to now, he was forced to close the theatre because he couldn't get film in sufficient quantities to run it. To force him out as an independent operator, he charges that Fox Midwest, for its single theatre, the Rivoli, has nearly three times as much film bought as it could run in its best year, and, as an opposition measure, cut boxoffice prices fully 30 per cent during the period in which he had the new Pix lighted. New Jersey Suit A Newark Federal Court suit instituted by Netcong Amusement Company, Inc., operators of the Netcong Theatre, charges unfair clearance between its town and Dover, eight miles distant. "Our suit was started because the majors are making us play behind Newton, Hackettstown, behind Dover, behind Boonton," said Fred Falkner, on Wednesday. Mr. Falkner operates six theatres with William E. Smith, his partner. Majors Win Tennessee Plea The defendants in the Government's anti-trust suit against the Crescent Amusement Company and the large distributors in Nashville won motions for a more definite statement and bills of particular and the exclusion of the section of the federal complaint dealing with exhibition practices such as cut-rate admissions, money and other give-aways. U. S. District Judge Elmer Davies took up the requests separately and granted some and denied others. Further action will be delayed at least three months because the Government was given 45 days to furnish the particulars ordered and the defend( Continued on following page)