Motion Picture Herald (Jul-Aug 1943)

July 10, 194 3 MOTION PICTURE HERALD 13 EXHIBITORS FIGHT DECREE; MAJORS HEED PROTEST Lawyers Offer Suggestion for Continuing Decree Expiring Nov. 20th What to do about the Consent Decree when its three-year trial period expires on November 20th is the subject of quiet discussion now going on in New York among the chief counsel for the five consenting distributors. More vociferous are comments from exhibition. In all corners leaders among independent theatre men have lifted their voices of late with loud demand that the entire document be thrown out. Several have sent delegations to Washington with trade practice protests for the Department of Justice. The Justice Department will have final decision in the matter. National Allied States Association, many of its regional affiliates and the Motion Picture Theatre Owners of America have proposed changes in the decree. This week Red Kann in "On the March," page 19, reported that Charles Francis Coe, vice-president and general counsel of the Motion Picture Producers and Distributors of America, Inc., granted an audience to West Coast theatre men in San Francisco, and suddenly drew a storm of protest over sales practices and rentals. Boston showmen have hired counsel in the person of George R. Farnum to lead a fight for legal limits on film rentals. Sales departments of distributors, led by MGM, have shown awareness of the growing theatre protests. All have renewed offers to adjust cases of unfair price and MGM has sent top executives into the field to meet with exhibitors. [See box on the following page.] Objective of these preliminary legal discussions in New York and Washington is to be ready with a series of constructive suggestions on the basis of which the compromise settlement of the Government's antitrust suit against the major film distributors can be continued indefinitely, it appears from the consensus of comment of home office lawyers. Discreet feelers have been directed toward Washington to determine the Government's attitude. Organized exhibitor sentiment is being watched closely. The lawyers and their staffs are analyzing the effects on distribution of three years of decree practices. Industry Lawyers Favor Compromise Settlement "Friendly but firm," is reported to be the attitude of the film unit of the anti-trust division of the Department of Justice. Several of the industry's leading counsel within recent weeks have called on Robert L. Wright, head of the film unit at Washington, and on Tom C. Clark, assistant attorney general, who recently replaced Thurman Arnold as chief of the anti-trust division. The visitors have included Joseph Hazen of Warners and Gordon Youngman of RKO. Officially these visits are described by both sides as just casual social calls. Observers see SENATE GETS NEW DIVORCEMENT BILL A theatre divorcement bill was introduced into the U. S. Senate Tuesday by Senator Harley M. Kilgore, West Virginia Democrat. It is identical with the old and often repeated Neely divorcement bill, and appeared to have been introduced in anticipation of the expiration of the trial period of the Consent Decree next November. The bill would make it unlawful for any producer or distributor to own, control, manage, buy or book films for, or operate any theatre or have any stock interest therein, direct or indirect. Distributors would be given 1 8 months after enactment to get rid of their present theatre interests and would have to file annual affidavits disavowing ownership of theatres. Penalties include a fine up to $5,000 or imprisonment for one year. Senator Kilgore succeeded Matthew M. Neely, now Governor of West Virginia, and the original sponsor of the bill. Senator Kilgore was the chairman of the sub-committee in which the Neely Bill died. No action was foreseen on the new measure before the summer recess. It goes first to the Senate Judiciary Committee. them, however, as preliminary efforts to sound out the Government on its attitude toward continuation of the decree. Decision as to what shall be done with the Consent Decree rests finally with the Department of Justice. Mr. Clark and Mr. Wright are the men who probably will make it. To them are being directed the views and representations, pro and con, of exhibitor organizations, independent producers and parties to the New York suit. Three courses appear open: 1) The Government may demand that trial of the monopoly and divorcement charges filed in July, 1938, be resumed. 2) By tacit agreement the decree may be continued much as it now stands. 3) Government and defendants may agree again on a compromise settlement and together work out amendments to the decree on the basis of experience during the three-year test period. The compromise course is favored by most of the consenting distributors. No one at Paramount, MGM, Warners, RKO or Twentieth Century-Fox is urging settlement by trial of the basic issues. This would be too complicated and not necessarily final, it was said. "The long and complicated court trial which this case would bring would not be a very constructive answer," one chief counsel said. "We would not have spent so much time and expense working out the decree and putting it into operation if it were to be merely a temporary settlement, or truce." "My company hopes that three years of constructive experience under the decree will be the basis for any changes in November," an other lawyer said privately. He admitted that some phases of the document might well be revised in the light of this experience, but declined to specify what amendments he would advocate. All of the attorneys were cautious in committing themselves. Most would go no further, for the record, than to confirm that discussions were under way. These talks have been within the companies themselves, among the five decree signatories, and in several cases with the attorneys who served as trial lawyers during the New York suit, and in drafting the decree. "We are considering the whole question very carefully," Gordon Youngman, general counsel of RKO, said. "Personally I am anxious to work out some sort of compromise. Something should be under way before the new film season starts in September." J. Robert Rubin, general counsel and vicepresident of Loew's, Inc., said that questions about his company's decree policy were asked "too soon." He indicated that there had been some discussion of the question, but that MGM was "not ready to do anything." Joseph Hazen, vice-president and general counsel of Warner Bros., conferred with Mr. Wright while in Washington several weeks ago. He passed on an informal report of the discussions to lawyers for the other companies recently but was not ready to talk publicly about Warners' attitude toward decree changes. Some Consideration At Paramount At Paramount, Louis Phillips said there had been some consideration of the decree's future but that serious discussion awaited the return of Austin Keough, general counsel. Illness has kept Mr. Keough from his desk for several months. Last week he was reported convalescing rapidly and his aides predicted that the leader in drafting of the original decree would be back at his office within a few weeks. Twentieth Century-Fox, according to Felix Jenkins, chief legal adviser, is not immediately concerned with the decree, but he supposed that talks would get under way "soon". He reiterated a previous declaration that the company was not anxious to initiate action. Other leaders also agreed that the first move for settlement of the decree's future should come from the Government. All of the lawyers emphasized that discussion now in process was intended to prepare helpful and constructive suggestions, if and when the Government asks for them. They emphasized that there was no anxiety to precipitate a showdown, or set any sort of November 20th deadline. "We see no urgency in the matter," one attorney said. He pointed out that his department was very busy with routine matters. Also it was handicapped by wartime inroads on its staff. "Little Three" Unconcerned About Decree Future "We are shorthanded, and so are all the other companies," he said. "Presumably the Government, too, finds its legal staff smaller because of the war. It would be a difficult time in which to start an involved new trial. This is one reason we feel a satisfactory compromise can be reached." The "Little Three", United Artists, Universal and Columbia, who were not parties to the Consent Decree, take the attitude that they are not concerned with current discussions of its future. They pointed out that they had not been brought to trial, nor a similar decree en (Continued on following page)