Motion Picture Herald (Mar-Apr 1947)

MAJORS FIGHTING TO RETAIN SYSTEM OF ARBITRATION Bidding Criticisms Mount; Myers Charges Abuses ATA and CSA Ask Court for Stay on the Bidding Provisions of Decree The five theatre-owning defendants in the New York anti-trust suit moved last Friday to keep the 31 motion picture arbitration tribunals a going concern. Banding together they forwarded to the Supreme Court their request for a stay of that portion of the New York District Court's decree which dissolves the Consent Decree arbitration system as of April 1. Previously the five companies had appealed the arbitration provisions of the decree. Close on the majors' heels, the American Theatres Association, the Confederacy of Southern Associations and Southern California Theatre Owners announced they would jointly petition the Supreme Court Wednesday for a stay of the competitive bidding provisions of the December 31 decree. Cite Hardships Under Bidding Provisions The arguments, drawn up by Thurman Arnold, ATA counsel, and Robert T. Barton, representing CSA, will center about the hardships that would be incurred by the independents if the bidding provisions went into effect. The fight of the ATA, SCTOA and the CSA to intervene in the suit is being opposed by the five major distributors. The organizations late in February appealed to the Supreme Court from the New York District Court's denial of their plea to intervene. RKO, MGM, Warner Brothers, Paramount and Twentieth Century-Fox on March 14, it was reported this week, opposed this appeal in a statement and motion to the Supreme Court, stating that the denial is not appealable in that the three exhibitor organizations do not have an "immediate and legal interest" in the suit and that they are "not adequately represented" within the meaning of the law. The organizations will present a counter brief on April 2. Stay Requests Limited Only To Dispute Over Clearance The arbitration stay request, drawn up by RKO, MGM, Twentieth Century-Fox, Warner Brothers and Paramount, was limited only to that part of the arbitration system which relates to disputes over clearance. Such disputes, however, make up the greatest number of cases tried by the Arbitration Association.' From November 20, 1940, the date of the Consent Decree, to last March 15, 361 of the 485 cases tried were clearance cases. Implementing its often repeated state (Continued on following page, column 3) HOW TO DO IT SOLUTION to the problem of competitive bidding. Phil Cowan, United Artists sales promotion head, demonstrates the method suggested in desperation by Paul Lazarus, Jr. In front of him are the other components of the "Safes Decree and Escape Kits" sent to salesmen: false mustache for escaping customers, steel files for escaping from jail, playing cards, whiskey glass, vouchers, poison, etc. The bidding experiments being conducted under the final decree in the New York antitrust suit moved into the argumentative stage this week as the U. S. Supreme Court prepared to hear application for a stay on the competitive bidding order from Universal, United Artists and Columbia. The argument was led off by a statement from Abram F. Myers, counsel and board chairman of Allied States Association, who charged that distributors are discrediting the bidding system by ignoring the provisions of the decree and that they are using the system to secure still higher film rentals. ■His charge was answered by an MGM distribution executive, who claimed that "it is highly doubtful that the bidding system will mean increased returns for the distributors, although, at the same time, the costs of distribution — at least of the five majors — are unlikely to go up." Disagreeing, Mr. Myers, while admitting the "evidence to date is comparatively meager,'' sees these four factors arising out of the bidding experiments: "The system is being used primarily to stir up antagonism among independent exhibitors to secure higher rentals. "The distributors are ignoring all provisions written into the decree for the protection of the exhibitors. "Where the competition is between an independent and a large circuit, the independent either will not be afforded the opportunity to bid or will be granted the privilege under the most discouraging conditions. "Even after an offer has been made to an independent, the pictures are subject to be withdrawn at any time and licensed to the circuit." Mr. Myers said he had yet to see an offer which stated any minimum price, whether in terms of a flat rental or otherwise, as required by the decree. Neither, he claims, has he seen an offer which follows the decree requirement that the distributor's offer shall include the availability and clearance, if any, which will be granted. In other words, Mr. Myers doesn't like what he hasn't seen. On the distributors side of the question, an MGM spokesman believes that "once things have simmered down we shall find that there will not be anywhere near as much cut-throat competitive bidding as everyone has foreseen." He believes that once bidding has taken full effect — and he is sure the Supreme Court will retain the bidding provisions — there will not be more than 250 situations in the whole country where features will be sold on a competitive basis. In Cincinnati, there is growing concern over bidding. There, this week, Irving Sochin, general manager of Theatre Owners Corporation, which buys and books for 46 independent houses, spoke up to say: "We consider the system unfair. It gives an advantage to the larger exhiibtor, who, for instance, may have a debt-free house in a strategic location and a reasonably low overhead. This places him in position to sacrifice a portion of his normal profits, if necessary, to submit a high bid. On the other hand, the 'little fellow' must constantly be price-minded and he is unable to compete against the high bidder in the more favorable position." Meanwhile, the bidding experiments continue. MOTION PICTURE HERALD, MARCH 29, 1947 13