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342 ^> ^> ^> The Motion Picture Industry
theaters would be of value in enabling the company to exploit its pictures more advantageously. Finally, the company suggested that the theaters were to be sought because it was believed that they would yield a profit in themselves.
If the object of theater ownership was to obtain exploitation, then the argument for the ownership of smaller neighborhood theaters is quite beside the point. Exploitation cannot be obtained in neighborhood theaters. While it is probable that the use of the theaters would serve as an added check on the type of pictures favored by the public, it does not appear that this was at any time a major object of the company.
The argument that the ownership of theaters would provide an element of bargaining strength has on the surface greater weight. It does not appear, however, that the experiment of this company in owning neighborhood theaters for the purpose of bargaining was a happy one. Three reasons perhaps may be advanced in explanation. First, assuming that a large amount of exploitation work had not been done, the value of Universal pictures to competitive distributors would be substantially less than it would have been if the Universal Pictures Corporation had controlled outstanding key theaters. Furthermore, the rentals obtained by such competitive distributors from the Universal Pictures Corporation would be substantially less in any event, since film rentals in neighborhood theaters were materially less than in the larger key theaters. Again, it must be remembered a very substantial number of subsequent-run houses were available to competitive distributors. In other words, these competitors were only incidentally dependent upon the Universal Pictures Corporation for their neighborhood distribution. The latter company, on the other hand, could not very well get along without the rentals obtained from the larger key theaters. These, in many cases, were owned by companies with which the Universal Pictures Corporation hoped to bargain. If one is to judge by the data given in the Film Daily Year Book for 1928, it would appear that at no time did the Universal