Showmen's Trade Review (Jan-Mar 1947)

10 SHOWMEN'S TRADE REVIEW, March 1, 1947 NATIONAL NEWSREEL Government Seeks Divorce in Decree Attack Bidding 'Unenforceable' Justice Department Says In Appeal Against Order (Continued from Page 9) agreement within their ranks which expressed itself at the various lawyers' meetings which were held continuously in the past two weeks. Twentieth Century-Fox attorneys reportedly were said not to favor an appeal and not even to have favored going through the action of introducing motions to the statutory court to amend and clarify the decree. These motions which were almost entirely denied were said to have been felt by the 20th-Fox counsel as wasted time. Also some attempt was reportedly made last week to persuade a Columbia executive to put in a word to his company to withdraw the appeal that had already been filed, presumably on the assumption that if all defendants withdraw, a calmer and more unified front might be presented to the Government appeal. When this failed, the Big 5 assumably decided to bring in their own appeal in body. Cites Copyright The Big 5, in a statement of questions involved cites the right of a copyright-holder to license his product and draw a comparison between this and the license on a motion picture in an effort to establish the right to fix minimum admissions and the right to roadshow. It also attacks the clause which requires the distributor-defendants to either acquire 95 per cent of their theatre holdings or reduce them to five per cent or less with the remark that this would cause them to dispose of "many valuable theatre interests falling within the banned percentage," and attacks the order dissolving agreements wherein they hold joint ownership of a theatre with a non-defendant. The section of the decree enjoining them from expanding their intrests to "enter a competitive field" or to protect their investments is also hit as a "barrier to healthy growth of a competitive basis." The Big 5 unanimously agreed, too, on arbitration and argue that the statutory court, in declaring it lacked the power to continue the arbitration system was at fault with previous decisions, citing the case of the United States vs. Swift and Company. Government Appeal Paramount asserts the court is in error in enjoining agreements whereby the sale of one picture is conditioned on the purchase of another. All five claim the court erred in prohibiting fixing admission prices, in finding there was any conspiracy on any point — maintaining fixed admission prices or clearances among others — in prohibiting the distributor defendants from "agreeing with each other or with any exhibitors or distributors to maintain a system of clearances ;" and in placing the burden of proof concerning a "reasonable" clearance on the distributor granting it. The Government's appeal claims the court was in error on 25 points. Among them are the allegations that the court erred by: (1) Not granting theatre divorce; (2) Failing to find that the defendants had "not actually achieved a monopoly in exhibition, either singly or collectively; (3) Not prohibiting the F.D.R. Documentary An 82-minute documentary based on the life of the late President Roosevelt is set for opening in New York at the Globe theatre on April 10, Producers Martin Levine and Oliver A. Younger said this week. The documentary made from newsreel clips and other official data produced through the cooperation of the U. S. Army Signal Corps was being scored this week, and was made under the editorial supervision of Eliott Roosevelt. Levine added that it had the approval of the Roosevelt family. defendants from making future clearance agreements ; (4) Not granting the requested ban on cross-licensing. The Government also disavowed the usefulness of competitive bidding as set up by the court, terming it "untried and unenforceable" and asserting that it "merely regulates the exercise of the major defendants' power to dominate the domestic motion picture industry." That the Government should attack competitive bidding did not come as a surprise. Actually it had never asked for it but the statutory court judges wrote it into their decree. The Government's disavowal of the bid clauses makes opposition practically unanimous for, in addition to protesting exhibitors, all three other prior appellants — United Artists, Universal, Columbia — attack phases of competitive bidding. Alleges Error The Government attack is based on allega15 tions of error by the court in decreeing competitive bidding as "appropriate relief in situations where the defendants' theatres are in competition with independent theatres," in failing to require that all bidding be by flat rental instead of percentages and "in concluding that the competitive bidding decree . . . would make it impossible for the defendants to discriminate unreasonably in favor of circuit theatres and against independents." As to clearance, the Court errs, according to the Government, in "failing to prohibit the guilty defendants from making clearance agreements in the future." (If this is upheld the nation's clearance system may be jeopardized. Distributors are reliably reported to be studying clearances at present.) Turning to the ban on cross-licensing, which the statutory court did not grant, the Government says : "The proposed injunction against the mutual Federal District Judge Marion Boyd of Memphis, Tenn., last week denied a petition for separate trials filed by M. A. Lightman, his associates, Malco Theatres, L & L Theatres, Warner Bros., United Artists, Universal, 20th Century-Fox, Columbia, RKO and Paramount in the $2,910,000 anti-trust damage suit filed by a group of independent exhibitors. Judge Boyd, in denying the arguments of the defendants' attorneys that the complexity of the case, if tried jointly, would baffle the average juror, ordered the defendants to file a reply to the complaint within 20 days. Date of trial will be set later. use by the defendants of each other's theatres for exploiting their films . . . would have eliminated the unlawful combination among the major defendants insofar as that could be accomplished by injunctive provisions. It probably would indirectly compel divestiture of some of the defendants' theatres in situations where they are dominant as theatre operators, but would not eliminate them as theatre operators in any situation where they are willing to compete. . ." Wants Divorce But it is on the court's refusal to grant theatre divorce that the Government centers most of its attention. "The court erred here," the appeal says, "in failing to order ultimate divorcement of the distribution and production business of the major defendants from their theatre operation," and "in failing to require the major defendants to divest themselves of all their theatre holdings." Further, the Government continues, the court is in error in concluding that the illegalities and restraints found to exist in the industry did not "result from the ownership of theatres by the major defendants," or that "total theatre divestiture would be injurious to the corporations concerned and damaging to the public," and in concluding that such divestiture "would not remedy the illegal practices . . . which had unreasonably restricted competition in the industry." In supporting its argument the Government remarks : "The majors' domination of exhibition as operators was, of course, confined to the areas in which they operated theatres, but these areas include all but four of the 92 cities in the United States with populations of more than 100,000 and a great majority of those over 25,000. In 38 of the 92 cities of more than 100,000, one or more of the defendants operated all of the firstrun theatres and this was true of more than 100 cities between 25,000 and 100,000." Never Competed The major defendants, the Government continues, never had competed with each other in the past in buying or selling film and there is nothing in the decree to "induce such competition in the future." Further the decree authorizes the majors to retain the "same vested interest in favoring each other's theatres as against outsiders as they had when the suit was begun" and allows them to use their theatres to play their own films." The plaintiffs — Chalmers Cullins, Nate Evans and Edward O. Cullins of the Idlewild Theatre ; Kermmons Wilson and wife and L. A. Weaver of the Airways ; James West of the Hollywood, E. R. Gillette of the Bristol, and Mrs. Lebora Cianciola of the Rosemary — charge that monopolistic practices by the defendants caused them heavy damages in their operations. In addition Evans and Chalmers Cullins are seeking damages on the losses they claim to have suffered through inability to get pictures, for which they blame Lightman when they operated the old Orpheum Theatre, several years ago. Lightman later took over the Orpheum to make it the ace house, of the Malco circuit. Separate Trials Denied in Memphis Anti-Trust Suit