Motion Picture Herald (May-Jun 1946)

Decision Ends Lengthy "Battle of Foley Square " U. S. VERDICT (Continued from preceding page) fore an abritration board composed of men versed in the complexities of this industry." The Government's contention the distributors had acted in concert to establish uniform systems of clearance was upheld, and the practice was declared illegal. A single distributor and a single exhibitor may agree upon clearance, but there should be no arrangement arrived at by concerted action. "Any form of block booking is illegal by which an exhibitor, in order to obtain a license for one or more films, must accept a license for one or more other films,'' the court declared. It ruled that groups of pictures could be licensed if the exhibitor has had the chance to bid for each film separately and has made the best bid for each. In ordering continuation of the arbitration system, the court indicated its sympathy with the process. "It would seem," the ruling observed, "that we cannot bind any parties to subject themselves to the arbitration system or the board of appeals set up in aid of it without their consent, even though we may regard it as desirable that such a system, in view of its demonstrated usefulness, should be continued in aid of the decree which we propose to direct." CHRONOLOGY The Federal Government's trial of the suit culminates a movement begun m 1929. The dates: October, 1929: Thacher decision holds standard contract arbitration clause illegal. December, 1929: First 5-5-5 confer ence held. August, 1931: Adoption of new standard contract approved in principle. December, 1933: NRA Code embodying standard license agreement approved. April, 1936: "Schechter Chicken Case" ends NRA. July, 1938: U. S. files anti-trust suit in New York. March, 1939: Distributors complete new Trade Practice Code. August, 1939: Thurman Arnold rules new Code illegal. June, 1940: First trial starts, adjourns after three days. October, 1940: Consent Decree approved. September, 1943: Negotiations for new Decree starts. August, 1944: Government moves for trial of suit. October 8, 1945: To trial in Foley Square. November 20, 1945: Court trial ends. January 17, 1946: Case to court for decision. June II, 1946: Decision filed in U. S. District Court. The Battle of Foley Square is in its final phases, but there have been many. The decision Tuesday is one of many in that court. There have been many briefs, many arguments, much preparation ; and there were three years of a well-known Consent Decree. Seven years after filing in New York's Federal Court, the Government's anti-trust suit "against Paramount Pictures, Inc., et al, defendants," came to trial in the same court. The date was the eighth of October, 1945. There had been a "trial" previously. That was June 3, 1940. It was three days for the record. That was when the Consent Decree came. The judges of Tuesday's decision were Augustus Noble Hand, Henry Warren Goddard, John Bright. Judges Hand and Bright are somewhat later in their acquaintance with the situation. Judge Goddard was there in 1940. Suit Filed in 1938 The suit was first filed July 20, 1938. • It asked divorcement of production from distribution ; free access by exhibitors to all product; injunctions against talent pools not available to independent producers ; abandonment of block booking, forcing of short subjects and newsreels, arbitrary designation of playdates, protection overbuying, double bills, the levying of score charges, and the designation of minimum admissions. It asked for a per' ^nt injunction, trustees, and a court order ' !!ng all contracts violating those objects. What the Government has achieved, after its unremitting struggle, may be gathered by a comparison of these objectives with the decision of this week. All through the court appearances the major companies denied the existence of monopoly. Three of them were dropped — Columbia, United Artists and Universal — and then rejoined as defendants in the 1940 trial. Paul Williams, chief Government counsel in that trial, asked they be included on the ground they had joined with the producer-exhibitor companies by making their product available first to affiliates, although "they may be reluctant participants to these practices." Decree Set Trade Practices That 1940 trial ground after three days to an armistice, punctuated by 13 postponements, and then the Consent Decree, in October, the same year. The Decree for three years held in abeyance the "divorcement" issue ; established maximum five picture block selling; banned forcing of non-features ; put under an arbitration system, the American Arbitration Association (establishing boards in key cities), the issues of protection, clearance, discriminatory film rentals ; and established the following conditions : That the distributor must give some run if certain conditions were fulfilled, that trade shows must be held within the exchange district before leasing, that cancellation may be exercised for cause, that films must be rented in the district where they are to be shown, that unreasonable withholding of prints be barred. And, also, that changes in theatre holdings must be reported, and that no general expansion of theatre holdings might be made within the three years. Sought New Decree in 1943 Negotiations for a new Decree began September, 1943, the companies continuing to observe generally its provisions, and the arbitration boards continuing to keep open their lists to exhibitor complainants. The Government, from whose Department of Justice staff Thurman Wesley Arnold, articulate foe of monopoly, had gone, to become an Appeals Judge, continued to amass evidence to support its early contentions that the industry's practices were proper targets for the Department's anti-trust division ; and in August, 1944, it moved for a trial. It was led in the anti-trust film division this time by Robert L. Wright, assistant attorney general, who for 20 days presented a prima facie case. Its case was one of documents, laboriously obtained through all the years, and hurled at the court in 300 different documents, embracing everything from angry exhibitor letters to an FBI investigation of 500 towns of less than 25,000 population. It concentrated on "divorcement." It did not press charges of monopoly ; but it did not erase them. Film Leaders Testify Among those who testified in the trial were Adolph Zukor, Paramount board chairman, who said his company's circuit assured the company's survival ; William F. Rodgers, MGM vice president and general sales manager, who testified he sold product to Loew theatres on the same basis as to others; Y. Frank Freeman, Paramount vice-president in charge of production, who described the fierce and essential competition in obtaining talent and story material ; Charles M. Reagan, the same company's vice-president in charge of sales, who denied conspiracy in distribution and affirmed that minimum admissions and clearance arrangements were necessary to protect product. The Great Case was filed in 1938, on July 20. It was postponed by the Consent Decree in 1940, on November 20. It lasted, in its final phases, 20 days. It ended in 1945, on November 20. Decision came June 11. 14 MOTION PICTURE HERALD, JUNE 15, 1946