Motion Picture Herald (May-Jun 1946)

MOTION PICTURE HERALD 14a THE unheralded and generally unexpected arrival of the verdict in the Government case spread through the offices of Manhattan Tuesday afternoon in a wave of bepuzzlement and set up a secondary %uave of rumors and conjectures. The findings of the court were still under the first swift examination while attorneys for the defendants prepared an interim statement of summary on how it looked. It frlloxvs. A crystallized charter of trade practices was written for the motion picture industry today by the U. S. District -Court composed of three judges in the anti-trust action brought by the Government against the major motion picture companies. The Court held that the motion picture companies owning theatres may retain such ownership provided that in each case they have a 95% or more interest in the theatre. Clearance or provision for time lapse in the showing of motion pictures in a competitive area was upheld as necessary to the distribution and exhibition of motion pictures, provided that the provisions in such respect were reasonable within the criteria for reasonableness set up in the existing Consent Decree between the companies and the Government. The motion picture companies must hereafter sell pictures on what amounts to auction sales to the highest bidder, without discrimination, in each area. The fixing of admission prices by agreement between distributor and exhibitor is held invalid. Joint ownership of theatres between distributors of motion pictures is held invalid and so-called pools are dissolved. The existing arbitration system is main tained by the decision of the District Court. Motion pictures may be licensed to exhibitors prior to their production and trade showing, but an exhibitor is given the right to cancel a motion picture after its trade showing. Exhibitors may bid and obtain the rights to license more than one picture at a time in their competitive bids for the motion pictures of the defendant distributors. While the decision brings about some changes in the existing structure and trade practice methods of the industry, it falls far short of the drastic relief of divorcement demanded in the Government complaint. First reactions indicate that the major companies in the industry may, without too much disruption, accommodate themselves within the period which will be allowed by the Court for such accommodation to the changes in the present practices and system required by the Court. FULL TEXT OF DECISION IN U. S. SUIT Vs. MAJORS UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK UNITED STATES OF AMERICA, Plaintiff, against PARAMOUNT PICTURES, INC.; PARAMOUNT FILM DISTRIBUTING CORPORATION ; LOEWS, INCORPORATED ; RADIO KEITH ORPHEUM CORPORATION; RKO RADIO PICTUNRES, INC. ; KEITH-ALBEE-ORPHEUM CORPORATION; RKO PROCTOR CORPORATION ; RKO MIDWEST CORPORATION; WARNER BROS. PICTURES, INC.; VITAGRAPH, INC.; WARNER BROS. CIRCUIT MANAGEMENT CORPORATION; TWENTIETH CENTURY-FOX FILM CORPORATION ; NATIONAL THEATRES CORPORATION; COLUMBIA PICTURES CORPORATION; SCREEN GEMS, INC.; COLUMBIA PICTURES OF LOUISIANA, INC.; UNIVERSAL CORPORATION; UNIVERSAL PICTURES COMPANY, INC.; UNIVERSAL FILM EXCHANGES, INC.; BIG U FILM EXCHANGE, INC. ; and UNITED ARTISTS CORPORATION. Defendants. Equity No. 87-273 Before : AUGUSTUS N. HAND, Circuit Judge, HENRY W. GODDARD and JOHN BRIGHT, District Judges. This is a suit to secure equitable relief against the alleged domination and control by the defendants and their affiliates of the motion picture industry in contravention of Sections 1 and 2 of the Sherman Anti-Trust Act. Decree granting partial relief to plaintiff. Wendell Berge, Assistant Attorney General ; Robert L. Wright, Philip Marcus, Elliott H. Vevp-, flnd John R. Niesley, Special As sistants to the Attorney General ; Frank W. Gaines, Jr., Gerald A. Herrick, Robert B. Hummel, Harold Lasser and Horace T. Morrison, Special Attorneys, For United States of America. Simpson Thacher & Bartlett, Attorneys for Paramount Defendants ; Whitney North Seymour, Louis Phillips, Albert C. Bickford and Armand F. MacManus, Counsel. Davis Polk Wardwell Sunderland & Kiendl ; J. Robert Rubin, Attorneys for Defendant ~ Loew's, Inc. ; John W. Davis, J. Robert Rubin, C. Stanley Thompson, Benjamin Melniker and S. Hazard Gillespie, -Jr., Counsel. George S. Leisure, Ralstone R. Irvine, Granville Whittlesey, Jr., and Gordon E. Youngman, Attorneys for Radio-Keith-Orpheum Corporation, RKO Radio Pictures, Inc., Keith-Albee-Orpheum Corporation, RKO Proctor Corporation and RKO Midwest Corporation; Roy W. McDonald, and Donovan Leisure Newton & Lumbard, Counsel. Joseph M. Proskauer and Robert W. Perkins, Attorneys for the Warner Defendants ; Joseph M. Proskauer, Robert W. Perkins, J. Alvin Van Bergh and Howard Levinson, Counsel. Dwight, Harris, Koegel & Caskey, Attorneys for Twentieth Century-Fox Film Corporation and National Theatres Corporation, Defendants ; John F. Caskey and Frederick W. R. Pride, Counsel. Schwartz & Frohlich, Attorneys for Defendant Columbia ; Louis D. Frohlich, Arthur H. Schwartz, Irving Moross and Max H. Rose, Counsel. Charles D. Prutzman, Attorney for the Universal Defendants ; O'Brien, DriscoU & Raftery, Attorneys for the Defendant United Artists Corporation; Edward C. Raftery, Arthur F. DriscoU, Chas. D. Prutzman, George A. Raftery, and Adolph Schimel, Counsel. AUGUSTUS N. HAND, Circuit Judge : The United States brought suit under Sec tion 4 of the Act of Congress of July 2, 1890, entitled "An Act to Protect Trade and Commerce against Unlawful Restraints and Monopolies", commonly known as the Sherman Act, in order to prevent alleged violations by the defendants of Sections 1 and 2 of that Act. The following is a general description of the defendants : 1. (a) Paramount Pictures, Inc., is a corporation organized and existing under the laws of the State of New York, with its principal place of business at 1501 Broadway, New York, New York, and is engaged in the business of producing, distributing, and exhibiting motion pictures, either directly or through subsidiary or associated companies, in various parts of the United States and in foreign countries. (b) Paramount Film Distributing Corporation, a wholly owned subsidiary of Paramount Pictures, Inc., is a corporation organized and existing under the laws of the State of Delaware, with a place of business at 1501Broadway, New York, New York, and is engaged in the distribution branch of the industry. 2. Loew's, Incorporated, is a corporation organized and existing under the laws of the State of Delaware, with its principal place of business at 1540 Broadway, New York, New York, and is engaged in the business of producing, distributing, and exhibiting motion pictures, either directly or through subsidiary or associated companies, in various parts of the United States and in foreign countries. 3. (a) Radio-Keith-Orpheum Corporation is a corporation organized and existing under the laws of the State of Delaware, with its principal place of business at 1270 Sixth Avenue, New York, New York, and is engaged in the business of producing, distributing, and exhibiting motion pictures, either directly or through subsidiary or associated corporations, in various parts of the United States and in foreign countries. (b) RKO Radio Pictures, Inc., a wholly owned subsidiary of Radio-Keith-Orpheum Corporation, is a corporation organized and existing under the laws of the State of Delaware, with a place of business at 1270 Sixth Avenue, New York, New York, and is engaged in the production and distribution branch of the industry. (c) Keith-Albee-Orpheum Corporation is a