Motion Picture News (May-Jun 1923)

2262 Motion Picture News Federal Investigation of Famous Continues (Continued from page 2261) prcssioii that Al tera ft was a separate corporation. Asked whether he, as president of Artcraft, held conferences with Znkor, he replied that he discussed Artcraft policy frequently with the latter. " The finances were furnished by Famous Players-Lasky," said Greene. Zukor, he explained, also arranged the Fairbanks, Cohan and Griffith contracts. The Elsie Ferguson contract was handled by Lasky. Greene was then asked about " the difficulty " in selling the Pickford pictures to the Stanley Company. Stanley Mastbaum, he said, contended that Artcraft was a subsidiary of F. P.-L. and the Pickford pictures should continue to go through Paramount. Greene said he argued with Mastbaum as to the independence of Artcraft. The Stanley company finally booked the pictures. "No special inducements on price were offered Stanley as far as I know," he addsd. Questioned about the disposition of Hodkinson's stock in Paramount, he declared it was sold to S. A. Lynch and subsequently sold by Lynch to Zukor. " Famous Players-Lasky acquired all the Paramount stock in the latter part of 1916," said Greene. Following the consolidation of the Paramount-Artcraft exchanges in 1919, Greene stated, he became the managing director of distribution for F. P.-L. The first lie heard of theater acquisitions, lie said, was in the early part of 1917, when E. Mandelbaum, who had started the Stillman in Cleveland got into " financial difficulties " and was given assistance by Famous. Acquisition of first-run theaters was discussed in directors' meetings in 1917-18, after a franchise plan had been abandoned. The deal for the Rialto and Rivoli was arranged through Felix Kahn, brother of Otto H. Kahn, said Greene. Just before he left Famous, Lynch and Zukor discussed the Southern Enterprises deal in his presence, the witness went on. Lynch was willing to put up $500,000, if F. P.-L. would put up an equal amount. Zukor took it to the board of directors "or the executive committee" with the result that the corporation was formed, the witness declared. Lynch also wanted to go into the Kansas City and St. Louis territory, he added. 'flu pari played by Zukor in the formation of Select Pictures Corp. was then revealed, according to the testimony. Greene said F. P.-L. formed the company jointly with L. J. Selznick in 1917, each having a half interest. " Famous Players-Lasky had considerable to say about the Select policies," the witness said. Objections to this line of questioning were then raised by Prather McDonald for the respondents, who declared that Select was not mentioned in the complaint. Marvin Farrington, for the Government, was sustained when hi argued that the general allegations covered the point. A year later, said Greene, Selznick bought the half interest owned by F. P.-L. and the format ion of Kealart immediately followed. Realarl had independent offices; and Arthur S. Kane. Morris Kohn and .lack Woody, who had previously been employed by Select, went to Kealart, the witness explained. Raker was the other witness of the day. He was told in detail of being engaged by F. P.-L. to go to India to handle with Frank Meyer the Famous Players' Indian project, w hich he said was financed by E. D. Sassoon & Co. of Bombay. Zukor's plan, according to Baker, was that the company was not only to produce pictures in India and market F. P.-L. American pictures there, but also to acquire theatres in the principal cities. He quoted Walter Wanger, then F. P.-L. production manager, as saying that the Indian concern would follow the same theatre policy as F. P.-L. in America — " to control the theatrical situation." Plans were made to purchase circuits in India, said the witness, but the whole plan was finally called off, when he received a cable from Zukor to come home in March, 1921. Zukor had previously described the Indian enterprise to him as part of a large plan by w hich he wanted to make F. P.-L. " the leading company " abroad as well as in America. From March to June, 1921, Baker testified he made an investigation of the " pedagogic picture " situation for Wanger. He talked with Bullitt, then manager of the Famous scenario department, and he favored the idea, but Zukor, Connick and Lasky opposed it. Baker then said a plan for " amalgamation " between F. P.-L. and Metro came up at a luncheon attended by himself, Wanger, Meyer and Emil Shauer. Robert T. Swaine, for the defense, objected to this as rank hearsay testimony and he was sustained. Asked what would be the effect if F. P.-L. went into his field — meaning educationals— Baker said it would out him out of business. This answer was objected to but the objection was overruled. When he was asked whf he didn't make features, Baker explained that he wanted to make only the best, and " with the theatre situation as it is at present, he had advised his board of directors against it." Independents with one picture, he said, were up against a stone wall. On cross-examination Baker was given a severe grilling by the Famous Players' lawyers. He had offered through an intermediary, to produce a picture based on an original story by Booth Tarkington, he said. This proposition w as made to First National, he said. He also " spoke " to R. H. Cochrane Universal, the witness declared, but made no attempts to market the idea to Fox, Famous Players or Metro. " You say a producer with only one or two pictures a year has no chance. Fairbanks makes only a few a year and he is successful, isn't he?" asked McDonald. Baker admitted that he was. " If a picture is excellent it will he shown, won't it?" persisted McDonald, hut Baker said that was not entirely the case. Richard A. Rowland took the stand on Tuesday. He stated that he understood that First National and Southern Enterprises had made a working agreement in 1922, and agreed to produce it, although he said he had not been directly connected with it. Reference to this so-called deal, made during I he cross-examination of Goldwyn. provoked a hitler wrangle between opposing. Goldwyn was asked by Marvin Farrington, for the Government, what the effect would be on the other producers in view of the "agreement " between the Lynch circuit and First National. "Very simple," answered Goldwyn. " The theatres would naturally play First National pictures first, and others it any open time was left." Robert T. Swaine declared the defense would not admit any such contract existed: if it did, it might merely be such a booking contract as was made with Southern Enterprises by other companies. Elek J. Ludvigh said he never heard of such an agreement. The standing of various companies as to quality pictures during the past several years was taken up, with the Famous Players' counsel stressing heavily the excellence of F, P.L., First National, Goldwyn, United Artists, and Metro. There were 3,500 franchise and sub-franchise holders in First National in 1919, he estimated, less than 5 per cent, of whom owned first-run theatres. Today, he said, there were 2,200, with the same percentage of first-runs. Regarding the cancellation of franchises by the exhibitor he said " it could be done on six mouths' notice, if all the pictures had been played or paid for and all bills settled in full." He reviewed in detail the history of Metro from its inception until he left the company in 1922. One of the high lights of Goldwyn's testimony was his story of an attempted merger of Famous Players Film Co. and the Lasky feature Play Co. with Triangle. This was initiated at the time the producers in Paramount were having trouble with W. W. Hodkinson, and the plan contemplated also the merging of Paramount Pictures Corp. with Triangle, he declared. Goldwyn also told of his resignation from Famous Players. Friction developed between he and Zukor, he declared, and Laskv sided with Zukor. He stated that he had left Goldwyn twice, but now owned more Goldwyn stock than when he got out. ( >n the acquisition of theatres by the Goldwyn corporation, the witness said in 1921 the company acquired 50 per cent, interest in .'!0 houses throughout the country. " Famous Players began to get hold of the theatre situation in 1919-1920." he declared. " And with the number of First National franchise holders growing, we found it very difficult for Goldwyn to get showings in key cities. The capitalization of the Goldwyn company was increased in order to acquire theatres." On cross-examination, the witness said he considered key city showings indispensable for the success of high-grade pictures. " The importance of Broadway in the first-run situation is not as great now as a year ago," he thought. " 1 don'1 think it good business for a producer to own theatres," the witness declared. " The motion picture industry is young and I don't think it advisable for any producer to dominate the theatre situation. If the producer can get his pictures played without owning theatres, it is better to do so. It is more advisable to have the two things separate and apart. The only reason Goldwyn acquired interest in theatres was because' it couldn't otherwise get into the key cities." Rothafel stated that the Capitol was owned by the Moredall Realty Co., with Goldwyn holding an interest in the theatre, but howlarge he didn't know. A lengthy cross-examination of the witness was then begun by Robert T. Swaine. Rothafel traced his career in the business from (Continued on page 2272)