Variety (Jul 1938)

Wediiosilay, July 27, 1938 PICTURES VARIETY WHERE IT WILL HURT with due regard for the dramatic punch, llie Department of Justice has cracked iovia on the film indusliy with an anti-trust suit in the Southern District ol New York at the moment when industry leaders <are planning g,trade conference between distributors and exhibitors for the purpose of atriicaibly adjusting many points of business conduct which the govern- ment cites in its biU of complaint. ■ .Sc»p« of the government's bill of particulars enibraces. nearly every trade pi-actice in, production, distl'ibution and exhibltibh." 'Only the public which tlivJs.ente'rtajuiTient and stimulus from Alms has escaped ..the-bar- rage, And yet, upon the conduct and outcome of the suit, aimed against the eight niajor film companies and'their innumerable executives, there is a public angle Of great litiportance. E Leavlnr /or the moment the Pollyanna viewpoint that only good can come from a deterjmination.of the issues, the outstanding fact is that testi- mony to be addijced from court hearipgs will : lay wide. open before the customers a revelation of intra-industry bickerings, and practices which likely to startle, disturb and alarm the public. 'J S[[ I Myron Selznick Launches First CONSENT iCREEl Of Profit-Sharing Production Units, Teanung Ernst Lubitsch Theatre Operation, .Which Gov't Would Divorce/ Is Most Profitable End of Picture Industry—Majors'^ Present Attitude Is They Won't Give 'Em Up With- oiit a Strong Fight, Though Wash. Sees Their Ulti- ' mate Surrender l«. the very nature of prosecuting its action,. the government .will' seek to prove monopoly and highhandedness oh the part of the Ave-major Aim companies which.brldge the making, selling-and showing of . Alms in their own theatres, in competition with independeiit enterprise... Fuel in the forrn of allegations will be supplied the anti-industry forces, which have, sought to burden the business as a whole Wjth censorship, legislative regulation and oppressive taxation. Never before has the fllm industry faced a'sltuatlon so potent with dan.- gerous reactions to the millions which are invested in tangible properties, and to the several hundred thousand men and worheri who. earn their living in the far-flung film enterprise, which American ingenuity, skill Biid talent have created. I( U not the government's suit, which will be conducted . along the orderly processes of established law, which- is -the ogre that faces the industry. The real menace is the prospect of disordered and destructive nioves which irresponsibles may initiate against the industry.at a moment when its defenses may be down. POLITICAL ANGLES . It is doubted in distribution: and other circle.s, including real estate, that': the industry would be ulti- mately favorable to: a consent de- cree, even if; the Government 5hou,ld make overtures in thisN di- rection on'the heels of. the Alihg of its civil anti-trust action in Fedr eral Court, Southern District- of N. Y. last' week (20). The complaint names too many practices on which correction or elimination is soughtl to suggest that major producer- j distributors, based . on a reported | Guh' Shy Haysians are not permitted to talk to men in big, black hats nowadays. . Since the- Depart- ment of Justice Jlled its anti- trust suit a-ai:ist the. motion picture indu-!try, they're all gun-shy of lads suspected : of beldnging to the D. of J.-. - Actually, however, the Hays organization books always wera open to perusal vf Depai'tmeiit of Justice or other federal' agents—and they were perused. SUIT MAY DELAY SELF-REG.- KENT That is. why all factors within the industry should rally to: the move- ment of expediting and aiding the prop6sed' trade conferences, which are being arranged' by a committee of distributors headed by Sidney B. Kent. That is why the proposed united industry drive for renewed public attendance . and. interest . in Alms, which is crystallizing Aiii committee i actions by George J, Schaefer and Howard Dietz, should have the un qualiAed support of the industry. Bill of Cbmplaint ' complete text of the Gavern- meiit's Bill •! CampUInt, flled- In Its an'U-trunt action against (he eight majori, snbsldiarles : and Individuals, is reprinted In this Issue of Variety sUrUnc:«n page 18. The best defense Is a strong pfTense. Fed. Anti-Trust Probe on Coast Goes Ahead Despite N. Y. Suit Los Angeles, July 26. Uncle Sam's probeirs, who have been- delving into booking records and correspondence In bulk of the major distributing company ex- changes here for the past IB months, seeking to discover possible viola- tions of the government's 1932 and 193.-} consent decrees, are continuing their investigation regardless of the monopoly suits Aled against majors in New York last week. Albert W. Law and Harold Coll special assistants to the U. S. attor ney general, have received no in Joe Schenck Sees Possibility of Snbsids Such as Standard Oil's early altitude, would be willing to enter into agreement on. .Most important point embraced In the suit, in the opinion of. trade sources discussing, it 'unofTicially, is the clamor for the divorcement of theatre:.operation from producing and distributing, a strong taste of which has been furnished by the Delay. In the setting up of a pro- gram of trade practices for self- regulation of industry problems be- tween producer-distributor and the- atre operation will probably result from the Government's anti-trust action, Sidney R, Kent, chairman of I the ■ committee, on sell-regulation, predicts in a statement :made from ; Rahgely, Maine, where he is on- a ' month's .vacation. - Kent's statement follows: .The civil suit instituted by the Department of Justice has in no way changed the determination of our-, committee to secure a solution of our trade problems. It is a re- sponsibility- which ■ we undertook and- will: attempt to complete. The trade practice questions now raised in the goyernmeht's-petition North Dakota statute ordering such ! demand:.a most careful re-examina divorcement. The fear, however^ is i tion of all the questions-involved, that the step taken, by the govern-] This will require further discuis- menl in this and other connections under charges of monopoly! may encourage, additional chain divorce- ment legislation: this fall or .winter when state law-making bodies con- vene. Considerable, doubt with respect to any willingness on the part of sion not only by members of the committee, but consideration by the respective counsel of all afle'cted. To that extent,-some delay, may be inevitable |n bringing the delibera- tions to the point of conferierice with exhibitor representatives. It should be noted that the slate- Hollywbod, July 26. Ti.rst of a series of producing unita, with Myron-Sel7.nick ill parliiership with prominent players, flireclors and -wi'iters, was launched Saturday (23), when Holly wood's leading agent hooked Up witli Ernst Lubitsch iii • compariy ,to be known, as Ernst Lu-. bitsch Productions, Inc. Further steps in the Selznick plan, one of" ttie most startling develop- ments in the picture industry ■ years, will be to form a number of proAt-sharing corhpaiiies which, jike the Lubitsch unit, ^ill bear the names of the personalities involved. This .plan, puts the big harnes of the scretin in. the ppsition-of gambling on their own drawing powers, taking~ their- pi-oAts or losses according to the po'pularity of their picture's on the world market. ' As agent for many leading players^ directors and writers, Selznick pro- poses to form dozens of partnerships similar to the Lubitsch hook-up, as'a necessary development of his man- agerial -functions. ' Meanwhile,, his agency will continue to do business- as usual. - Selznick Is no- new hand in the production ganie; He was trained by his father, Lewis: J. Selznick, whoi turned out hundreds of major Alms. Cantor's 'AVerage Man' ; Hollywood, July; 26. Eddie Cantor's next picture will be 'Mr Average Man,' slated ttf go Into production at 20th-Fox.Aug.-27. Comedian has been Conferring with Darryl Zuhuck in Europe, on the script. the industry to consider a consent; ment of the Department of Justice Paris, July 26. Joseph M. Schenck, chairman of structions from Washington to either ! proceeding decree is predicated on the ques- tion of what points would be in- volved and AThich of the-se points, were a trial held, would be kicked out. Scores of se.<;sions among in- attorneys inside and : riess, Hays' officials! no doubt be held j 1 before there is any agreement on 1 exactly what cour.se to pursue, with | . a .consent decree, even if desired by; Outcome of the tilt will mean at • 5(,n,g surely being heavily resisted tContinued on page 23) friendly litigation and hot a crimi Disney Acquires Site For $1,000,000 Studio; Wia Cut Prod. Time speed up or stop their quiz and are ^ going right ahead in their attempt worst the setting up of subsidiaries | j,y '^'3„y oJ,^,-;. to determine if widespread com- such as Standard Oil of New York, " New .Jersey, etc., says Schenck. ' He goes to Carlsbad from, here, returning to U. S. in September. plaints by'indie exhibs of violations by Fon-West Coast Theatres and dis- tributors exist. • . Oliservers here fail to see any con- nection in the New York action.^' with the anti-trustviblations charged . on this end. Opinion .ln local Aim : circles is that it will be only a mat- ter of time before governmeint ac-; tivity is shitted to the west coast. Federal Bureau- of Investigation quizzer.-i. headed, by the veteran G-1 nian. .lames Findlay, arid working ■ under.supervision of Law and Col-; li Farnol West $3»a,000,OOS In Theatres It Is estimated that the .more than 2.000 theatres aggregately owned by the Ave major affiliated companies Hollywood, July 26. A 55-acre tract in San Fernando valley, Ju.<t outside of Hollywood, has Ijeeri acquired by Walt Disney for a Sl.OOO.OOO studio to KCt under way in Sept. Site co.st $100,000> ill new plant with all rhodern. ap- poiiilmeiits, Disiicy expects to . cut lins. are,currently winding up their; ^.^^y^^ to discuss current matters investiRation in RKQ Radio's localism, uA heads and producers, as exchange and preparing to move j as to' meet everyone at the iiito Warner Bros.' exchange around j^jig AMgUit 1. Quiz of latter's books an . : — ■ : fecords was set back, due to inabil-' >ty of WB's eastern attorney, I. How-' Levine's U A Tie-Ill fll^tW"nr' *T ''*^;f" '°i Hollywood, .July 26. . ^CfiJlfs^iT^/^-be atleasl-.N^t^vined..^^^^^^ Sept. l before Law and Collins wind : 'o a-ssociale h.m with Eail loiial investigation, after Postponing his trip to the Coa-tt. aires, if that .ha.-i to-happen, originally slated for Saturday (231.' ALso there is. the quc.-ition Lynn Farriol takes off tomorrow ] stockholder interests in these cn - night (Thui-s.), making the iri west tulls and various territorial units by" plane 1 comprising them. „ , I f„„ ,i,„,,t In mote thaii onp instance these Farnol goes west for about two are worth $300,000,000. It has re- | down production ot feature-length quired years of effort and invest- (.a,-ioon.^ from present .schedule of ment to build these circuits. It will ■ jj nioiUhs to around 10 liionth-s. Dis- equire years to di.spo.se of the the-, „L.y jajj oUlput would continue , at one , feature aiiiuialiy and that nnw studio would not allow for cnlarge- mont of lhal production .schedule Disney ridiculed i-oporls that his brother Roy is in Kiiropc to .siyn up ffireis'i car'.ooii tiiiiwU. up their lotal investigation. ^1°^^ ^^'""^'. *l"ch . voluminous reports and I <^''a"<* National lelease. . lecoinmenaations will be . made to,- Currently. Levine is dickering witli ThUrman Arnold, as.<!iStant attorney i United Artisl.s to general in charge' of anti-trusl vio- films lie ' ' lations. .1 iliwiice. Hi M. Warner Returning East; Blumienstock Back elcase,; several iiitencis to produce and affiliated chains represent all orino.st ot their company's total proAls. The bi.^"iest affiliated chain, of cbuise. is Paramount, with upwarils of 1/200 theatres. company domi- nated Ijy broker and banker eoin- binations. Paramount operates many - ——— ■ of its Iheaties through partnership- airy. M. Warner is e.xpccted east arranijemenLs. Profit from the.so ; in a week or 10 days. He will re^ theatres, all told, ran to around main at the home nfllce about three $15,000,000 ill 1937, for Par and its wpck.s. theii go to Kurope. partniers. I Mori Blunienstock, in charfie ot Par once could have sold il.s chain • publicity and advertising at the War- trt Loew's for $50,000,000.'. Today. I ner li.o.., returned to N. Y. yesterday tl-.p nphvork of theatres is valued at; fTues.) after di.scu.-tsing' coming | between .$7ij.000.0CH) and $85,000,000, 1 piodijot. caininiiiiii.s, etc.; on the (Continued on pa3e 27) ' Coast.