Boxoffice-Febuary.14.1948

: February
DECISION OF SUPREME COURT
IS EXPECTED ABOUT MID-JUNE
Destiny of the Industry
Is Now in the Hands
Of Eight lustices
By J. U. JERAULD
WASHINGTON—The antitrust story ha.s
now been presented to the United States
supreme court. Eight of the nine justices
were on the bench this week to liear the
final act of the drama which began in
July 1938. Only Justice Jackson, who wat
attorney general when the case started
disqualified himself.
Indications are that some kind of a ruling
or
decision may be expected during the first
half of June, as the court usually takes
some form of action on cases it hears before
the end of the term.
A THREE-DAY SESSION
The oral arguments made before the court
on Monday, Tuesday and Wednesday differed
little from those which already had been
projected in the various briefs. One of the
surprises of the case was the acceptance of
competitive bidding by MGM; another was
the contention of Whitney North Seymour,
counsel for Paramount, that the lower court
erred in failing to permit testimony from
exhibitors on how the decree would affect
them. Hence, he suggested, the case should
be sent back to the lower coui't for correction
of this error.
Tom Clark, attorney general, made the
opening arguments for the government and
Robert L. Wright, assistant attorney general,
who conducted the case in the lower courts,
was joined by John Sonnett, in charge of the
antitrust division of the Department of Justice,
in rebuttal arguments. Herman Levy,
counsel for MPTOA, and Abram F. Myers,
general counsel for Allied States, did not
speak, but the court accepted their amicus
curiae briefs. However, the exhibitor viewpoint
was not without representation. Thurman
Arnold appeared in behalf of ATA and
John O. Jackson and Colonel Robert Barton
gave arguments in behalf of the Confederacy
of Southern Ass'ns.
COURT IS A SELLOUT
In the language of the theatre, the sessions
of the court were "sellouts." Those who
did not have tickets stood in line. There were
hundi-eds of these and about 50 were permitted
to stand in the rear of the courtroom.
The auditorium, with seats for the
press and some of the spectator attorneys
placed between the majestic pillars, held 316
persons, exclusive of the judges and court attendants.
It was, indeed, an impressive and
solemn drama.
FIRST DAY
Attorney General Tom Clark was the first
speaker. The only interruptions in this court
are by the justices who ask questions. The
speakers don't harangue. There is no obvious
oratory.
Clark insisted that complete divorcement
of exhibition from distribution was the only
John W. Davis (center), who represented Loew's, Inc., before the supreme court, is
shown leaving the building with J. Robert Rubin (right), vice-president and general
counsel for Loew's, and Carter Barron, the company's representative in Washington.
way to "pry open" competition. He said the
government had contended since 1944 that
"no appropriate relief could be obtained without
divorcement."
He pointed out that the expediting com-t
ruled there had been restraint of trade both
before and during the three-year period of
the consent decree by fixing minimum admissions:
by conspiring with each other to
maintain a nationwide price-fixing system; by
"conspiracy to maintain a nationwide system
of runs and clearances which was substantially
uniform as to each local competitive
area"; by granting "discriminatory
license privileges to theatres affiliated with
other defendants"; by "allowing deductions
of film rentals on double featui'es so as to
have a competitive advantage"; by moveovers;
by excluding "foreign pictures and
those of independents"; by master agreements
and franchises; by conditioning the licensing
of one pictme on another, and by "formula"
deals.
In reviewing the statistics of first run ownersihip
by major distributors, he said:
"As the court found, in the 92 cities of the
United States with a papulation of 100,000
or more, 70 per cent of all the first run
theatres are affiliated with one or more of
the major defendants. Although they liave
interests in only about one-sixth of the
18,000 theatres in the United States, those
theatres pay about 45 per cent of the total
domestic film rental received by the eight
distributor-defendants. Of the remaining 55
per cent, about 5 per cent is received from
the five largest unaffiliated circuits and bhe
balance of 50 per cent is received from the
remaining independent theatres. The court
also found that the theatres affiliated with
the major defendants paid to the major defendants
from 71 to 81 per cent of all film
rental paid by those theatres and paid to
the three nonexihlbitor defendants from 16
to 26 per cent. Thus 97 per cent of the rentals
paid by these affiliated theatres was paid
to the defendants, and all independent distributors
together received only about 3 per
cent.
"The court foimd that in 38 of the 92 cities
of 100,000 or more in population all of the
first run theatres are affiliated. Most of the
affiliated theatres are located in cities of
24,000 or more and most of them are first
run theatres. For this reason about 70 per
cent of the film rental that comes from first
rmr exhibition of the defendants' films in
cities of 25,000 or more comes from affiliated
theatres. There is no region in the United
States in which one or more of them is not
dominant."
As was expected, Clark took a stand
against competitive bidding. It was unsought
and was not discussed prior to the filing of
the opinion in June 1946, he said. The decision
was not adequate to end tlie violations
found, he asserted.
Clark again took a stand against crosslicensing
of pictures among defendants' theatres.
To the surprise of some of the spectators
Thurman Arnold, former assistant attorney
general, appearing for the ATA and the
Southern California Theatre Owners Ass'n,
was the next speaker. He sought permission
to intervene. His argument was confined entirely
to an objection to competitive bidding.
He described bidding as "the foul part of the
decree." It directs a course of action for exhibitors
not a party to the suit, he said. An
important objection to biddir^, he declared,
was that it compelled exhibitors to accept the
defendants' judgment on reasonable prices
for film and forces them to submit to uniform
rules—something contrary to the purposes
of the antitrust suit.
"How can they determine the best bid?" he
asked, and then he answered his own question
by saying that "complete discretionary
power" was left with the distributors.
John O. Jackson, attorney for the Confederacy
of Southern Ass'ns, also an opponent
BOXOmCE :
14, 1948