To prohibit and to prevent the trade practices known as "compulsory block-booking" and "blind selling" of motion-picture films in interstate and foreign commerce .. (1939)

8 TRADE PRACTICES IN MOTION-PICTURE INDUSTRY thiiik of sliowiiig a motion picture without announcing and advertising it in his local comnuinity. Every-day experience demonstrates this, if there is any complaint it is that the motion pictures exhibited by the theater are overadvertised to the public. 'While it thus can be seen that there may be very serious doubt that the conditions and oppressive practices complained of by the sponsors of the bill actually exist in the motion -picture mdustry, the important question now presented concerns the specific enforceable provisions of the bill itself. These are contained entirely in sections 3 and 4 of the bill, and should be examined carefully in the light of their effect upon the motion-picture business. Sec. 3. (1) It shall be unlawful for any distributor of motion-picture films in commerce to lease or offer to lease for public exhibition films in a block or group of two or more films at a designated lump-sum price for the entire block or group only and to require the exhibitor to lease all such films or permit him to lease none; or to lease or offer to lease for public exlaibition films in a block or group of two or more at a designated lump-sum price for the entire block or group and at separate and several prices for separate and several films, or for a number or numbers thereof less than the total number, which total or lump-sum price and separate and several prices sliall bear to each sucli relation (a) as to operate as an unreasonable restraint upon the freedom of an exhibitor to select and lease for use and exhibition only such film or films of such block or group as he may desire and prefer to procure for exhibition, or (b) as tends to require an exhibitor to lease such entire block or group or forego the lease of any number or numbers thereof, or (c) that the effect of the lease or offer to lease of such films may be substantially to lessen competition or tend to create a monopoly in the production, distribution, and exhibition of films; or to lease or offer to lease for public exhibition films in any other manner or by any other means the effect of which would be to defeat the purpose of this Act. (2) It shall be unlawful for any person knowingly to transport or cause to be transported in commerce any motion-picture film which is leased, or intended to be leased, in violation of subdivision (1) of this section. Section 3 of the bill is designed to deal with so-called compulsory block booldng. Subsection 1 of section 3 prescribes the law which a distributor must adhere to when negotiating with an exhibitor for exhibition contracts for more than one motion-picture fdm. Subsection 2 of section 3 makes it unlawful for any person to transport a motion picture which is or is not intended to be the subject of negotiations or contracts in violation of subsection 1. Section 5 (1) imposes imprisonment not exceeding 1 year, or a fine not exceeding $5,000, or both such fine and imprisonment, on every person who violates section 3. The provisions of section 3 (1) are substantially identical with the provisions of an order issued by the Federal Trade Commission on Jidy 9, 1927 against one of the large motion-picture producing and distributing companies, but wliich on review by the Second Federal Court of Appeals was set aside and amiulled (1932) {F. T. C. v. Paramount Famous Lasky Corp., 57 Fed. (2d) 152). The section was contained in S. 3012 (74th Cong., 2d sess.) and in S. 153 (75th Cong., 3d sess.). Since its formulation by the Trade Commission it has always been the subject of attack by every distributor of motion pictures on the ground that no distributor could safely offer motion pictures in a group at prices different from the prices at which the several motion pictures may be offered separately, because the distributor cannot Imow whether such differences in prices make the exhibitor select other films in the group offered in addition to "only such films of such block or group as he may desire and prefer to procure for exhibition."