Motion Picture Herald (Nov-Dec 1946)

MAJORS HIT ROADSHOW BAN MPTOA ASKS ARBITRATION Universal Asks to Hold Its Franchises; UA Seeks to Block Book Westerns Final documents in the Government's antitrust suit were filed this week in the New York District Court by the five theatre-owning defendants, Universal, United Artists, Vanguard and the Motion Picture Theatre Owners of America. The three judges sitting on the case now face a mountain of legal documents which they will winnow down to a final decree which will be undoubtedly appealed to the Supreme Court as soon as it appears. Documents filed this week were : A proposed decree from Universal which seeks to maintain its franchises. A proposed decree from United Artists asking for road show exemptions to the price-fixing order and for exemptions to the prohibition on block booking for Westerns. An addition to Vanguard's proposed decree asking for road show exemptions. Certain legalistic deviations from the five majors' proposed decree and a request from the majors for road show exemptions. A statement from MPTOA to include arbitration in its final decree and an MPTOA approval, with reservations, of the majors' alternative to competitive bidding. Universal is concerned, in its proposed decree, over the fact that the majors are given the equivalent of franchises by being permitted to retain their theatres. Universal points out that under the proposed decree it cannot keep its franchises since the court expressly enjoined franchises now standing and, further, enjoined the defendants from entering into any such agreements in the future. Franchises, Universal believes, are not in themselves illegal. The company's decree states : "Universal desires to license independent exhibitors and should be permitted to make franchises in the future with nonaffiliated theatres. ... to the extent of permitting it thus to license its pictures to independent exhibitors showing them exclusively." Has 727 Franchises Now With Independent Owners The company now has 727 franchises with independents and hopes to retain these. It has 43 franchises with affiliated theatres. The decree makes no particular point about franchises in the future with affiliated theatres, but does make considerable point about franchises with non-affiliated theatres. Citing the U. S. Supreme Court decision of 1938 on General Talking Pictures Cor poration vs. Western Electric, Universal asks that the court's decision on clearances should read: "From granting any clearance in excess of what is reasonably necessary to enable the licensor to reap the reward of which he is entitled to under his legal copyright monopolies." Asks for Stipulation on Minimum Admissions The company also asks that one road show be permitted the company a year, providing the feature to be roadshown has a negative cost of $3,000,000 or more. Thomas Turner Cooke is counsel for Universal. United Artists, while admitting it should be enjoined against setting minimum admission prices, asks in its proposed decree that it have the right to insert in its license agreements a stipulation that the exhibitor should maintain the admission prices in effect at the time of signing the contract. UA is careful to point out, however, that such an agreement would stipulate no particular admission price nor would it provide for penalties in the event the exhibitor failed to charge the minimum. UA also wants the right to license exhibitors for separate runs and with separate clearance between runs, provided run and clearance are negotiated with the exhibitors independently and separately. The company wants one road show exemption a year, that exemption to have a $3,000,000 negative cost, and wants the right to license the series Westerns in groups of not more than six where the main character in each group is the same and where the cost of each picture is not more than $200,000. Vanguard Seeks Exemption On Road Show Ban That road show exemption, which has been emphasized by all the companies on trial, is the sole concern of Vanguard's new document. Vanguard, intent on protecting its multi-million dollar investment in "Duel in the Sun," asks that "nothing in the judgment be construed to limit, impair or affect the right of each defendant to roadshow upon such terms and conditions as may be fixed by such defendant distributor of the producer of motion pictures which have a negative cost of not less than $3,000,000 provided that each may commence only one such picture during any consecutive 12month period from and after date of judgment and provided that the licensing of such picture, when it is placed in general release, shall be subject to the terms of the decree." The five majors jointly agree with United Artists, Universal and Vanguard on the negative cost and the one-a-year exemption for road shows, but elaborate their requests for exemption by asking permission to lease any theatres, or license any exhibitors for road shows, or to play road shows in their own theatres. They ask that a minimum evening admission of $1 be made for adults. MPTOA's supplemental brief reiterated the organization's plea for arbitration. It hopes that "the court will order arbitration as part of the final decree and that the number and classifications of arbitrable matters be as extensive as possible." "We submit," the memoranda continues, "that it was not the intention of the court to have arbitration restrict the Government in decree enforcement nor to compel exhibitors to use it to the exclusion of other remedies. The failure to decree arbitration will keep the industry hopelessly entangled in litigation by which it has been so sorely tried for many years." See Need for Arbitration Even with Auction Selling MPTOA wants arbitration simple, wants it financed by the defendants and wants it even if the court should not take favorable action on the "alternative proposal" offereii by the majors to replace the court's order for competitive bidding. That alternative proposal is a plan which would guarantee some run, inhibit discrimination in granting run, and refer all controversies to arbitration. This alternative plan has been approved, with reservations by MPTOA following a poll of its unaffiliated officers, directors and the representative membership of its state and regional units. All but three of the replies, the memorandum points out, were favorable. But MPTOA warned : "This endorsement of the alternative proposal ... is not to be taken as even suggesting the discard or deemphasis of your petitioners' proposal . . . that the court, by injunction, restrain the further indulgence by the defendants in the unlawful practices found to exist and then . . . open the industry to all lawful avenues of competition." Dismiss Anti-Trust Suit Against Scophony, Ltd. The Department of Justice received a setback in New York last Wednesday in its anti-trust suit in the television field when a motion to be dismissed as one of the defendants was granted to Scophony, Ltd.. London. Federal Judge Edward A. Conger ruled that the court lacked jurisdiction over the British company. Other defendants in the action, which is not expected to go to trial before next spring, are : Television Productions, Paramount, General Precision and Equipment Corporation and the Scophony Corporation of America. MOTION PICTURE HERALD, NOVEMBER 9, 1946 23