Motion Picture News (Nov-Dec 1925)

December 5 , 1925 2637 Trade Commission Hears Final Arguments in Famous Case Fuller Repeats Monoply Charge in Reply Brief THFj full membership of the Federal Trade Commission began the hearing of final arguments in the case against Famous PlayersLa sky and others on charges of attempts to create a monopoly in the picture industry and other unfair methods of competition, last Tuesday. The arguments were opened by W illiam H. Fuller, chief counsel for the commission, who reviewed the activities of Zukor, Famous Players, Southern Enterprises and other respondents from 1912 to the present time. He paid a great deal of attention to the alleged activities of Zukor in carrying out his plan, which he declared Zukor had admitted, of securing control of the industry. The commission's counsel also recited the activities of Southern Enterprises in gaming control of the Southwest — the alleged "wrecking squad" which was sent through that part of the country, whose activities resulted in the purchase and erection of a number of the theatres which made up the chain. He dwelt upon the tactics pursued bv Southern Enterprises, as alleged by witnesses during the hearings, for gaining control of towns and cities. Mr. Fuller quoted from the testimony, citing Messrs. Hodkinson, Goldwyn and Fairbanks, Miss Pick ford and others, to show the danger of " closed" markets and the need for "free and open competition" in the distribution and exhibition of pictures, and also went into the question of block booking. At this point, Commissioner Thompson asked whether all companies had adopted block hooking', and after the query had been thrown back and forth a few moments, Robert T. Swaine, counsel for Famous Flayers, stated that it had been adopted in some form by all companies except United Artists. The New England situation was also covered in Mr. Fuller's opening argument, the acquisition of Black's New England Theatres and of other houses being detailed. In closing, Mr. Fuller again attacked the changes which appeared to have been made by the respondent's counsel in their brief, citing the differences between the proof of the brief as filed on November 2 and the brief itself, as filed November 10. "They point out sixteen points made against your examiner and counsel (in the proof), the closing paragraph of which is as follows : " 'The foregoing instances of perversion in the report and brief have been cited not for the purpose of concealing the issue by the throwing of mud, but for the purpose of demonstrating that both, the report and brief of the commission's counsel are untrustworthy.' " He declared that the statements in the actual brief were radically different from the above, and added that if the charges are true, the commission's counsel should be disbarred; if untrue, similar treatment should be meted out to the counsel for the respondents who had made them. The first arguments for the respondents were made by Charles E. Rosen, representing the Saenger Amusement Company, J. H. Saenger and E. V. Richards. He asked the commission to dismiss the charges against his principals, declaring that nothing had been brought into the case to show either that the Saenger company was party to the alleged conspiracy or to show that it exercised a monopoly in its territory. "We were brought into the case through misapprehension on the part of the examiner," Mr. Rosen said. He detailed how the holder of 40 per cent of the company's stock was negotiating with the Saengers for the sale of it; how he had been offered +300,000 for the stock by Saengers, but sold to Southern Enterprises for $350,000. The stock was then turned over by Southern to Georgia. Enterprises, and the purchase was taken as evidence that Saenger was party to the alleged Famous Players conspiracy. "The facts are that, so far from being a collusive proceeding, the Saenger people resented the fact that the people from whom they were buying pictures bought an interest in their company." Mr. Rosen declared, and told how the Saengers had refused to give Georgia Enterprises the representation on their baord which had been exercised by the former stockholder. He said that the Saengers were never satisfied until they were able to buy the stock back in 1923, for the purchase prices plus interest, making a cost of about $375,000. Disessing the charges of monopoly, he pointed out that the commission had previously investigated and dismissed such a charge. He admitted that the Saengers booked Paramount pictures 100 per cent "because they are good pictures" and held a franchise in First National, but pointed out that they also bought from independents. He admitted that competitors could not get Paramount pictures, but pointed out that the Saengers were unable to get pictures which were booked by competitors; he admitted that they booked for other exhibitors, but declared the affiliation was voluntary on the part of the exhibitors. But, he pointed out, it cannot be said that the Saengers buy more pictures than they need or get any pictures to shut out a competitor. "Not only has there been shown no unfair method of competition," he conch ded, "but I undertake to say that never have you examined a record in which men have come through cleaner, with a more honorable record. Through their industry and effort, risking their personal fortunes, the two Saengers, Ashe and Richards, starting from nothing, have built up a motion picture industry to a point of service never before known in the territory where they operate." Declaring that Mr. Fuller's opening argument had been a "philippic," Robert T. Swaine, counsel for Famous Players, challenged the commission to show that his organization has ever held a monopoly on the motion picture industry. Taking up the ownership of theatres by Famous Players, he declared that the records of his company, covering 17,156 houses, indicated that there were probably 20,000 motion picture houses in the country. The examiner found, he declared, that on September 1, 1924, Famous Players owned interests in 179 theatres, of which 157 were motion picture houses, and in 98 of these theatres the interests amounted to control. In other words, he asserted, Famous Players had interests in less than one per cent of the motion picture theatres of the United States; "it had so obtained a monopolistic position that it actually controlled one-half of one per cent of the motion picture thetres of the United States. "This would not even constitute a violation of the Volstead act, let alone the Sherman act," he declared. Changes alleged to have been made in the brief of the Famous Players-Lasky Corporation between its initial service on November 2 and the filing of the completed brief on November 10 are assailed in the reply brief counsel for the commission, in answer to the charges made by Famous Players. The brief at the outset declares that counsel for the film corporations in the controversy to be heard by the Federal Trade Commission on Tuesday had lost their tempers and that it would be necessary for government counsel to "dissipate the huge banks of fog which respondents have stirred up." "The attitude of the respondents toward all who have opposed their wishes in this case," says the brief, "has been more like the unreasoning anger of a spoiled child over a broken toy tban the mental control to be expected of lawyers engaged in complicated litigation." Fuller maintains that the so-called Zukor brief filed by the accused film companies did not respond to the issue and is insufficient in its defense "of the right of the American manufacturer to sell his product directly to the consumer without the interposition of either wholesale or retail middlemen." That right, Fuller states, is not disputed.