Motion Picture Herald (May-Jun 1946)

I4d MOTION PICTURE HERALD can successfully operate without access to defendants' product."^ The licenses are in effect price-fixing arrangements among all the distributor-defendants, as well as between such defendants individually and their various exhibitors. Such combinations we hold to be forbidden by the Sherman Act. The exhibits submitted in this case contain numerous express agreements between the various distributing defendants and their licensees stating the minimum admission prices which licensees are required to maintain in showing the distributors' pictures in the areas concerned. The agreements are not only between the distributor-defendants and other defendants owning theatres, but also between the distributor-defendants and independent theatre owners. A correlation of these agreements shows that in many instances the minimum prices set forth in the license agreements by the various defendants are in substantial conformity. Indeed, it is conceded in the joint brief filed on behalf of Loew's, Paramount, Warner, RKO and Twentieth Century-Fox that the admission prices included in licenses of the various distributor-defendants are in general uniform, being the usual admission prices currently charged by the exhibitors. At pages 31-2 of the joint brief it is stated: "The testimony shows that it is the general practice of all the distributors, whether dealing with independent exhibitors or affiliated ones, to include a provision in the license agreement that the exhibitor shall not charge less than a specified minimum admission price during the exhibition of the particular picture or pictures licensed.*** The minimum admission price included in the license is not one which the distributor dictates, but is the usual admission price currently charged bv the exhibitor. (R. 433, 718, 968,_ 999, 1382-3). It is the practice of exhibitors to charge the same scale of admission prices over a period of time and not to change them according to whose pictures are being exhibited or according to any fluctuations in the type of picture." A similar statement is made at page 18 of the brief of Columbia, and the brief of United Artists and Universal appears to argue on the same assumption at pages 24-39. It does not seem important whether the distributor was the more controlling factor in determining the minimum admission prices. Whether it was such a factor or merely acceded to the customary prices of the exhibitors, in either event there was a general arrangement of fixing prices in which both distributors and exhibitors were involved. But it is plain that the distributor did more than accede to existing price schedules.* The licenses required them to be maintained under severe penalties for infraction, and the evidence shows that the distributors in the case of exceptional features, where not satisfied with current prices, would refuse to grant licenses unless the prices were raised.^ Moreover, the distributors, when licensing on a percentage basis, were interested in * Reasjan. vice-president in charg-e of distribution and sales for Paramount, testified as follows: "O. Well, does that (the admission price) fix his right to a particular run or to clearance? A. It would have an influence upon the run and clearance, yes, sir." * * * * ♦ "Q. Why would you be interested in the minimum admission price or the admission price charged by the exJiibitor in connection with determining what run you would negotiate for? A. Because the admission nrice that he charges determines the film rental that I can earn for my pictures." Record, pp. 718-9. See also testimony of Kupper in charge of distribution organization of RKO. Record, p. 1084. ' The defendants in the Goldman case were substantially the .same as those here, except that Universal Corporation was there eliminated by agreement, ° Testimony of John J. Friedl, president of Minnesota Amusement Company — the stock of which is owned by Paramount, was as follows: "Q. Are there occasional instances of special attractions where there is a negotiation as to a higher admission price with the distributor? A. That has come un on several occasions. In the case of the picture 'Woodrow Wilson', and several other pictures, they have been released by the distributors as road show attractions, and in those cases the distributors insisted upon road show prices, and it was the option of the purchaser, or the theatre, to buy or not to buy those Theatre City, State Para III It It in Loew's Warner RKO Fox Col. U.A Univ. Sneicer Akron, Ohio 30c. 27c. 30c. 30c. X X 30c. X tax excl. Bailey Buffalo, N. Y. 30c. X 30c. none 27c. 29c. none X Liberty Covington, Ky. 28c. X 33c. none X X X X tax excl. tax incl. Madison Covington, Ky. 28c. 28c. X none 28c. X X X tax excl. LaSalle Niagara Falls, N. Y. 30c. 27c. X none 27c. X X X tax incl. Paramount Akron, Ohio 20c. 22c. 25c. none 20c. X 25c. X tax excl. Capitol Cleveland, Ohio 30c. 27c. 30c. X 30c. X X X Shaker Cleveland, Ohio 3Sc. X 35c. X 35c. X 35c. X tav fvrl Heights Cleveland, Ohio 30c. 27c. 30c. none 30c. X X X tax excl. Senate Detroit, Mich. X 37c. 35c. none 35c. X none X Ritz Baltimore, Md. 25c. 28c. none 25c. X none 25c. tax incl. Vilma Baltimore, Md. X 25c. 28c. none 25c. X none X Centre Baltimore, Md. X 30c. 33c. X 30c. X X 30c. tax incl. Hampden Baltimore, Md. X X X X 27c. X 27c. 2Sc. Columbia Baltimore, Md. X 25c. 28c. none 25c. X X 2Sc. Broadway Baltimore, Md. X 27c. X X 27c. X 27c. 25c. Apollo Baltimore, Md. X 25c. X X 27c. X 25c. 2Sc. Irvington Baltimore, Md. X X 28c. 2Sc. 25c. X X 25c. Montevista Cincinnati, Ohio 30c. 30c X 33c. X X 30c. X 20th Century Cincinnati, Ohio 29c. 30c. X 30c. X X 30c. X tax excl. Jackson Cincinnati, Ohio 29c. X X X X X 30c. X tax excl. Esquire Cincinnati, Ohio 29c. X X X X X 30c. X tax excl. Sunset Cincinnati, Ohio 29c. X X X X X 30c. X tax excl. Westwood Cincinnati, Ohio 29c. X X X X X 30c. X Lawrence New Haven, Conn. 27c. 27c. 33c. 27c. 27c. X 25c. X Westville New Haven, Conn. 30c. 30c. 33c. none 30c. X 30c. X Pequot New Haven, Conn. 30c. 30c. 33c. 30c. X X 33c. X Whalley New Haven, Conn. 30c. 30c. 33c. none 30c. X 30c. X Hamilton Indianapolis, Ind. 35c. X 3Sc. 35c. 35c. X X X Sunshine Albuquerque, N. M. none 40c. X 42c. 40c. 30c. X X Rio Appleton, Wise. 40c. 46c. none none 45c. none X 46c. plus tax 9c. tax incl. Rex Beloit, Wise. 36c. 27c. 40c. 35c. 36c. 35c. X 42c.plus tax 8c. tax incl. Capitol Charlestown, W. Va. X 40c. X 40c. x X X X Albee Huntington, W. Va. 40c. 40c. 34c. 35c. 40c. X X X Reed Alexandria, Va. 35c. 35c. 39c. none 35c. 37». X 35c. tax incl. Rosna Norfolk, Va. 27c. 27c. X X X X X Flynn Burlington, Vt. 25c. 36c. X 35c. 40c. X X X Gloria Charleston, S. C. 40c. 40c. 44c. 27c. 40c. 15c. X 3Sc. or Riviera Stadium Woonsocket, R. I. 40c. 40c. X none X X X X Bijoux Woonsocket, R. I. x X X 44c. 3Sc. 35c. X 30c. the prices charged and even when licensing for a flat rental were interested in admission prices to^ be charged for subsequent runs which they might license on a percentage basis. Likewise all of the five major def^dants had a definite interest in keeping up prices in any given territory in which they owned theatres, and this interest they were safeguarding by fixing minimum prices in their licenses when distributing their films to independent exhibitors in those areas. Even if the licenses were at a flat rate, a failure to require their licensees to maintain fixed prices would leave them free by lowering pictures at those prices; but if he expected to play the picture at that time, he would have to charge such admission price. ''Q. And if he was not willing to advance his admission price to meet the distributor's terms, he had thfi opportunity to play this picture on regular run, is that right? A. At a later date, that is correct. _"Q. _ Is the provision for that minimum admission price included not only in license contracts for firstrun exhibition but also for subsequent-run exhibitions? A. Yes. I think it applies in all cases. _ "Q. Is it included in license contracts for percentag<? pictures and also for flat rental pictures? A. Yes, sir "O. Where the admission price is included for subseauent-riin exhibition, does your answer with resnect to who determines the admission price apply to that as well? A. That is correct. But. of course, it is reasonable_ to assume, to understand, that in setting our admission prices.^ we do not do that on an arbitrary basis because it is reasonable to expect that the larger theatres playing the first-runs would get the maximum the current charge to decrease through competition the income in the licensors' own theatres in the neighborhood. The whole system presupposed a fixing of prices by all parties concerned in all competitive areas. The similarity of specified minimum prices prescribed for the same theatres in the distributor-defendants' contracts of license is shown by the following table collated from exhibits in evidence.^ The exhibits used to prepare the table contained answers of the defendants to plaintiff's interrogatories about the first block of five features licensed for the 1943-44 season by each of price for the protection of the distributor and the producer. And in the secondary houses the prices are less. "Q. That is, generally speaking, the first-run houses charge a higher price than subsequent-run. and then the prices step down among the runs? A. That is correct." Record, p. 1000. 'This table is derived from PlatinflF's Exhibits 41, 42, 57 (1-49). 82, 94, 126, 127, 128, 139, 365, 369. In most of the exhibits there was no indication as to whether the admission price given included or excluded taxes. When this information was given in the exhibits, it is stated in the table as "tax incl.", or "tax excl." The word "none" is used to mean that though a license was in evidence, no admission price was specifically stated in the contract, either through inadvertence or on the understanding that the admission prices currently being charged or contained in previous licenses would be continued. Record, pp. 433, 724, 782, 1082, 1211. The symbol "x" is used to indicate that no license of that distributor for that particular theatre was in evidence.