Motion Picture Herald (Mar-Apr 1947)

HIGH COURT STAYS BIDDING; CONTINUES ARBITRATION Reed Signs Order Halting Execution; 20thFox To Continue Auction Trials The industry need not comply with the distribution provisions of the New York District Court's Decree in the anti-trust suit pending appeal of the case, Supreme Court Justice Stanley Reed ruled late Monday evening. He signed a sweeping order staying competitive bidding, which was to have gone into effect July 1, and saving the Consent Decree arbitration system, which was to have been dissolved April 1. The order was modified to exempt Twentieth Century-Fox, which had argued with its co-defendants over the content of the order, from all stays except those which it specifically requested. In a separate stay order, the company asked only for postponement of the competitive bidding and arbitration provisions of the Decree. 20th-Fox Will Continue Bidding Experiments Although it wanted to see bidding stayed, "Twentieth Century-Fox will continue competitive negotiations because they have proven to be the most satisfactory way to settle disputes between exhibitors." That statement, the first from a major distributor since a stay on bidding was first indicated more than a week ago', was made Monday in Chicago by William C. Gehring, 20th-Fox's central division sales manager. His company attorneys, Mr. Gehring said, had advised him that competitive bidding could be continued even though the Decree provisions were stayed. 20th-Fox, according to Mr. Gehring, is conducting competitive bidding experiments in between 35 and 50 situations in the central division and is continuing to accept request for competitive bidding. The distribution injunctions, in addition to bidding, stayed by Justice Reed's order are those which would have prohibited the distributors after April 1 : 1. From granting any license in which minimum admissions to a theatre are fixed. 2. From agreeing with each other or with any exhibitors or distributors to maintain a system of clearances. 3. From granting any clearance between theatres not in substantial competition, 4. From granting or enforcing any clearance against theatres in substantial competition with the theatre receiving the license for exhibition in excess of what is reasonably necessary to protect the licensee. 5. From making or further performing any formula deal or master agreement. PARAMOUNT HEADS TALK DECREE IN MAY A meeting of Paramount executives and theatre partners, to discuss all phases of the New York District Court's decree in the industry antitrust suit, has been set for May 6 to 9, Leonard H. Goldenson, the company's vice-president in charge of theatre operations, announced this week. Paramount home office executives who are to attend are Barney Balaban, president; Austin C. Keough, vice-president in charge of legal affairs; Edward L Hyman, Leon D. Netter and Robert Weitman, vicepresidents in charge of Paramount Theatres Service Corporation; Montague Sowthorpe, treasurer; Walter Gross of the legal staff; Max Fellerman, J. J. Deitch and Hal Pereira. 6. From performing or entering into any license in which the right to exhibit one feature is conditioned upon the licensee's taking one or more other features. 7. From arbitrarily refusing the demand of an exhibitor to license a feature to him for exhibition on a run selected by the exhibitor, instead of licensing it to another exhibitor for exhibition in his competing theatre on such run. Additionally, the provision placing the burden of proving the legality of clearance upon the distributor and the provision giving the licensee the right to reject 20 per cent of the features not trade shown prior to the granting of a license are stayed. Franchise Prohibition In Effect Immediately These include all provisions of Section II of the Decree except the prohibition of franchises. Section V of the Decree, dissolving the arbitration system, was also stayed by the Justice's order. All stays apply to RKO, MGM, Warner Brothers, Paramount, Columbia, United Artists and Universal. Only the stay on competitive bidding and arbitration, the only ones 'asked for, apply to 20th-Fox. What effect these stays will have upon company policy and operation was not immediately made known. The defendants can, for example, engage in competitive bidding even though a stay of that order was granted. The stay-order affects only the New York court decree. The legality of the court's decision of June 11, upon which the December 31 decree was based, will not be decided until the Supreme Court hears the appeals from the decision. Present estimates are that the case may not reach the High Court until next winter or spring. No stays were requested on the provisions of the Decree affecting ownership of theatres, pools, leases and partnerships. At the time of signing the stay order, Justice Reed gave the defendants and the Department of Justice until May 20 to docket their appeals from the New York Court decision with the Supreme Court. If a company has not filed its appeal by that date its stay will be terminated. Friday, March 28, in Washington, Justice Reed indicated to counsel for the eight defendants he would sign the order he finally signed Monday night. He requested counsel to draw up a single stay order embracing the views of all companies. April 2 all defendants, except 20th-Fox, agreed to the stay order which was signed. The next day the independently-minded 20th-Fox submitted to the Supreme Court a separate and dissenting draft. Justice Department Opposes Arbitration On Monday, the Department of Justice told the Supreme Court what it wanted — but principally what it did not want. The U. S. came out as flatly opposed to any stay which would continue Consent Decree arbitration. In submitting its proposed stay order, the Justice Department sent a separate letter to Justice Reed voicing strong objections to a delay in the abolition of arbitration. The Department's order, however, did include a request for a stay of competitive bidding and two other paragraphs of Section II of the decree: those forbidding the distributor from entering into any license in which the right to exhibit one feature is conditioned upon the licensee's taking one or more features and forbidding the distributors from arbitrarily refusing the demand of an exhibitor for a run which he requests. AAA Offices Can Now Accept New Cases On the abolition of the arbitration system, Justice Department attorneys said: "There is no basis at all for a stay of this section." Justice Reed did not agree. New cases can now be accepted by the 31 tribunals of the American Arbitration Association. During the week the AAA was in doubt about its future in films ; it was reported from Chicago that the organization had plans underway to consolidate all the midwestern offices of AAA into one large office in Chicago and to have offices in New York, San Francisco, and New Orleans and perhaps in one or two other cities. MOTION PICTURE HERALD, APRIL 12. 1947 13