Boxoffice-August.28.1948

Suit Starts 'Ball Rolling
Against Circuits and Combines
NEW YORK—The SIMPP antitrust suit
against the Cooperative Theatres of Michigan
and United Detroit Theatres will start the
legal ball rolling against large circuits and
booking combines in "tight situations," industry
lawyers predict.
Their predictions are based on statements
made by SIMPP members during the past
few days and on inside dope of contemplated
antitrust cases that will probably be filed
as a result of the Detroit action.
SIMPP has been investigating "tight situations"
throughout the country, according to
Robert J. Rubin, SIMPP attorney.
Tlie Detroit action is only the first, but
not the last action to be brought by independent
producers against theatre chains
"which have been throttling comipetition with
their illegal stranglehold on the picture market,"
said Samuel Goldwyn, a member of
SIMPP.
Goldwyn's remarks were contained In a
joint statement issued with Walt Disney, another
SIMPP member, August 26, two days
after the suit was filed.
They linked the outcome of this action
with that of the Paramount antitrust case
which will be resumed by the New York
statutory court October 13'.
They mentioned that SIMPP has given the
government all the help it could in the case
against the major companies. (SIMPP first
tried to intervene in the case and when the
New York court denied permission to intervene,
it filed a brief as friend of the court.
It argued for divorcement and against competitive
bidding).
Goldwyn and Disney also referred to reports
of a consent decree settlement for the
Paramount case and expressed the hope that
the government would not agree to any compromise
in this "fight against screen monopoly."
They promised that there will be no
compromise in the suit against Cooperative
Theatres and United Detroit.
Lawyers here predict that it will take four
or five years to settle this case, judging by
past court performances in other important
antitrust actions.
Meantime other independents and small
exhibitors will probably file actions of their
own against large circuits and combines. One
such case is now under discussion in New
York. The prospective plaintiff is a medium
sized independent exhibitor. His legal targets
would be several of the larger circuits.
If SIMPP should win its case, that would
mark the end of booking combines, lawyers
agree.
Some legal experts and exhibitor leaders,
who refused to be quoted, feel that SIMPP
has done the industry an injustice in filing
the action regardless of the merits of the
case.
They predicted that the suit will add to the
confusion and chaos already plaguing the
industry. They said that it wiU further
damage the industry's already damaged
reputation.
The way things are today, the industry
cannot afford additional antitrust suits. The
SIMPP brief mentioned the existence of more
than 60 now before the courts.
Critics of the SIMPP move said that this
case may eventually interfere with production,
because neither exhibitors nor producers
will feel free to make any move without becoming
involved in court actions.
Abram F. Myers, general counsel for Allied
States Ass'n, said the suit did not affect his
member organizations. Allied is in no way
connected with Cooperative Theatres of
Michigan.
At one time no member of an exhibitor organization
could belong to the Cooperative,
he said.
When that rule was in effect several
Allied members resigned when they joined
the Cooperative. That rule since has been
withdrawn.
He also mentioned that he, as Allied general
counsel, does not represent any booking
or buying combine. There are cases where
Allied members are associated in such combines,
but such combination is in the line of
exhibition business and not as a trade association
activity, he pointed out.
Detroit Antitrust Suit
(Continued from page 8)
reference to the basic "Paramount or Equity"
case in the New York courts has a special
position.
Basically, the plaintiffs claim that its members
are harmed to the extent that the
screens of American theatres are subject to
"illegal and restrictive combinations," resulting
in curtailment of the market for their
product. According to Gunther R. Lessing,
chairman of SIMPP's executive committee,
the suit is filed as a major step in a program
to restore competition between theatres,
and so enable the public to get a better
choice of films, and the independent producers
to get their rightful share of retm-ns
from the domestic market.
Essential background of the Detroit situation,
as summarized by the plaintiffs is that
the two plaintiffs control 90 per cent of boxoffice
receipts in the Detroit area other than
first run, and UDT itself controls 65 per cent
of first run boxoffice receipts.
Another fundamental attack is on the
much-discussed dual bill day-and-date programming
for the hierarchy of runs from
second on down. It is alleged that other
theatres, nonmembers of the defendant
groups, are compelled to conform to the same
dual bill pattern. Accordingly, it is contended,
in the 62 most important neighborhood
theatres in the Detroit area, the theatre
going public is afforded only a choice
of four programs.
In answer to this point, Earl Hudson issued
a statement that "it is sound business
to make all pictures available and schedule
the same double features at the same time
as a matter of public convenience. Under
any other system, it would be necessary for
theatregoers to cross the entire city to see a
particular show."
In turning its attention to Cooperative, the
complaint recites a history, recorded in these
columns over several years, going back to
1930. It is contended that the organization
does not admit a new member to its benefits
if his admissions is opposed by any competitor
who is a member—a situation generally
similar to that in the Associated Pi-ess case
which made history about two years back.
Distributors representing the plaintiffs tried
to meet the concentration of buying power in
Cooperative by dealing with nonmember
houses, but, it is claimed, this resulted in
Cooperative's admitting some competing theatres
by splitting product between houses.
Then:
"The allocation of product to the various
theatres is dictated to the distributors by
Cooperative, and such distributors have no
alternative except to comply therewith. By
this means competition was eliminated, first
between former nonmembers and the members
of Cooperative, and. second upon such
former nonmembers being admitted, between
competing member theatres."
It is charged that opposition by even one
member has always resulted in rejection of
an applicant for membership in Cooperative,
and that the organization restricts the resignations
of its members in order to maintain
control over film exhibition, and will not permit
resignation as long as any contracts remain
outstanding.
With regard to first runs, it is charged that
no other theatre within 65 miles may play
the same feature as a first run, during its
engagement. According to Lessing, Detroiters
who wanted to escape this restriction must
drive this distance, or to Windsor, across the
international line.
It is further charged that UDT insists upon
a right of first refusal for product of Loew's,
Warner, RKO Radio, Paramount, and United
Artists. Pointing out that some of the plaintiffs
distribute through RKO and United Artists,
it is charged that distributors of independent
product are prohibited from dealing
with the Fox Theatre, largest house in
town, operated as a first run by a 20th-Pox
subsidiary according to the plaintiffs—unless
UDT gives specific consent. Any attempts to
license pictures outside of "UDT's first run
monopoly" have been met, it is said, by reprisals
in the form of less advantageous
terms, bookings, and playing time in subsequent
runs of such pictures—thereby effectively
maintaining the first run position.
It is the contention of the plaintiffs that
this alleged conspiracy has resulted i'l forcing
down the price paid for their pictures and
the allocation of less favorable playing time
for them, since UDT and Cooperative are
charged with agreeing beforehand upon prices
and conditions, and agreeing not to compete
against each other to raise the price. It is
said that the two groups insist upon concluding
a deal on a particular picture with both
before either will date the picture—thereby
placing the distributor in a disadvantageous
position with that exhibitor group which has
yet contracted for the film. This further results,
it is said, in lengthening the actual time
between first and second runs, and decreasing
the value of the film accordingly.
Another highly important charge is that
the groups have combined to prevent distributors
from getting percentage agreements
with both United and Cooperative for the
same picture.
An interesting sideline is contributed by the
charge that, if one of the groups does not
want to buy a particular film, which is one
of a pair set for dual billing, the other group
will not date the other film until a satisfactory
substitute has been bought by the first
group to complete its day and date billing.
10 BOXOFFICE : : Augiist 28, 1948