pictures, and I want him to select the best pictures out of the entire group that I have.

Mr. HINSHAW. Are they according to your selection or his selection? Mr. RODGERS. In accordance with his selection.

Mr. HINSHAW. With his selection?

Mr. RODGERS. Oh, by him.

Mr. HINSHAW. How does he select them?

Mr. RODGERS. Well, they have been arranged according to different prices; the different prices that he has to pay; and each group is put in a bracket and he may select some pictures from each bracket, depending upon what he may want to play in his theater.

Mr. HINSHAW. You mean, from time to time, as the pictures are released he can purchase 30 out of the group, but he must select some of them?

Mr. RODGERS. Yes.

Mr. HINSHAW. After looking at the 30?

Mr. RODGERS. Yes. When the release of each picture is available he may look over the record and say, "I do not want this picture." Of course, we try to persuade him that it is a good box-office picture, but he may still say, "I do not want to use it," because he may feel it is not suited to the needs of his community.

Now, I do not mean that is a cancelation; do not misunderstand me. The fellow who buys the entire block gets the 20-percent cancelation, but the fellow who only buys 20 pictures in the beginning has his cancelation in the first place, because he has already made his selection. But that selection rests with him.

Mr. HINSHAW. He selects the picture originally by number, according to the contract that I have here, a certain number?

Mr. RODGERS. Yes.

Mr. HINSHAW. Does that have any significance to the exhibitor? Mr. RODGERS. Not particularly, except as each picture comes out it is designated by a number, and the reason I think originally—1 am not sure as a result of dividing the production between competing theaters. For instance, a number of Warner Bros. theaters divide products with an independent operating theater in the locality. Mr. HINSHAW. What about the quantity?

Mr. RODGERS. As to the quantity, after he picks out the pictureshe may want a certain number of pictures, and they are divided; we may divide them No. 2, 4, 6, 8, and 10, and so forth, and the other groups in 1, 3, 5, 7, and 9. And that way he knows that he is not getting the whole block of any one bracket.

Mr. HINSHAW. When these numbers are assigned, to the contract, do they take the same number everywhere; is it universally assigned? Mr. RODGERS. The same number goes all over the country.

Mr. HINSHAW. For instance, the No. 5 is the No. 5 everywhere? Mr. RODGERS. I think so.

Mr. HINSHAW. And not just in one place?

Mr. RODGERS. I think that is right.

Mr. HINSHAW. Now take the exhibitor who buys 30 out of 52 pictures; does he have the right to select the number, that number of pictures?

Mr. RODGERS. He does. He selects the pictures; he does not buy the block.

Now, as to the number, I am a little confused about that, whether they have the same number for the same picture all over the country. I think when the picture is released, the release number is the same, is identical; that is the same number all over the country, but it may not be that they have the same number in the contract. That is a little confusing in my mind. I would not be sure about that without checking it up.

Mr. HINSHAW. That is, whether the No. 5 in the contract is the No. 5 everywhere?

Mr. RODGERS. That is what made me change my mind after the first thought. I am very much of the opinion you might find this picture would be designated in one territory with one number and another in another territory. For instance, we had a picture not so long ago called the Bad Man of Brimstone, which was particularly successful in certain parts of the country but was not in other parts of the country. Now, in that section of the country where it is successful it might be given a higher designation.

In an area for instance, in the neighborhood of New York, or in the neighborhood of Chicago-it might be that it would have to be put in the second or third bracket, whereas in the best it may be a top picture, put in the top bracket. But that is always something that is worked out between the theater owner and our office.

We would cover that from the home office in New York, and that is something that can be worked out between the theater owner. whether he thinks it is desirable for his particular community.

Mr. HINSHAW. I would assume, from that explanation, that if the picture appeared to be a B picture rather than an A picture, the man in the area where it is desired would have to pay more than the B classification for it?

Mr. RODGERS. But it would solve itself the next time around, because he would not have a picture in the B category; it would equalize itself, because the same condition might be reversed with the next picture.

For instance, we had a picture, Women, that was very successful in the East, but did not go over so very well in the West.

Mr. HINSHAW. When this exhibitor has a contract, giving him the right to select a number of pictures, he tells you, the moment the picture has been released, that he would like to have that picture. Now, what grade do you assign to that picture?

Mr. RODGERS. Well, the same grade that would apply to his entire territory, which, generally speaking, is national, and it is only in the unusual case where there is an exception. He would have the same designation, that fellow would have the identical designation, as the larger circuit in his territory and, generally speaking, the larger circuits of the country.

Mr. HINSHAW. In other words, the exhibitor, when he signs this contract, is signing up for a gross amount in value of pictures, and you assign to him whatever is necessary to make up that gross?

Mr. RODGERS. So long as it does not go outside the number in bracket. But if the total number of pictures in each bracket makes up 36, he may decide to buy only 30.

Now, I have 10 pictures that he does not want; possibly, for some reason, he does not think it will be a good picture for his particular Now naturally I would like him to take the 30 pictures at the

area.

very top.

But he may decide to use some pictures that are in the second bracket, because he may feel that they are better suited for his community than some of the other pictures. But he makes the selection himself.

Mr. HINSHAW. How is he going to know whether the picture is a good box-office picture for his community? A picture that goes over good with one exhibitor might be a failure with another exhibitor.

Mr. RODGERS. Generally speaking, it does not work out that way. It is true that there have been such cases, but, generally speaking, a picture which is received well in one section will be received well all over the country. Of course, it is true that there may be sections of the country that would like one type of pictures, but, generally speaking, that is not the case; but a picture that is successful in one part of the country will run well in another.

Mr. HINSHAW. But you do not give him the selection of 52 pictures. In other words, if he picks 30 out of 52, if he has that right, what is the gross price to him-is it the same regardless of what pictures he selects?

Mr. RODGERS. No. In the first place, the pictures would not be all the same price; some of them have been played, and some have been given a percentage return which puts them in a different bracket. For instance, we may have in the No. 2 bracket the $100 pictures; and in the No. 3 bracket, $80; and in the No. 4 bracket, $70 or $60. Now, when we designate the picture we tell him the bracket that it is in, and he knows that he would pay for it if he wants it. But he knows that in advance.

Mr. HINSHAW. Well, it is a very complicated thing.

Mr. RODGERS. I know it is very complicated to one who does not live with this industry as we do, because there are so many complications in this business, and I am sorry that I cannot make it clearer. But you see, when I make a contract with such a man, to all intents and purposes we work out the price for the entire 52 pictures and they are specified prices for each bracket. From the results that have been gained through an actual testing of the pictures we designate each.

Now, if he is selecting 36 pictures he may specify some from one bracket, maybe 5 from the second bracket, or maybe 5 from the third bracket, and so on; and he may use only half of the pictures in the top bracket, or he may just select a few of them.

Mr. HINSHAW. Now, regardless of the pictures he selects, do you make the general statement to all such people that the pictures are designated in certain brackets?

Mr. RODGERS. Yes; wherever available we try to make that statement. They can always find out if they want to by reading what is

sent out.

Mr. HINSHAW. But the same statement is made to all exhibitors? Mr. RODGERS. To all exhibitors; yes. But the pictures have already been tried out; the pictures go out for a preliminary trial; they go to 50 or 100 theaters and we find out what the public's reaction is. I might mention the picture Romeo and Juliet, which cost two and a half or three million dollars to produce, and yet after a trial run we found out that it was not being received as a top picture, and it was designated as an in-between-class picture, and I think a good many exhibitors thought that was a very satisfactory arrangement.

Mr. HINSHAW. When you bring these pictures out, do you have to designate a certain proportion of them in different classes—that is, do you designate them, say, 50 percent in the first class, or 50 percent in the second class or do you have some in between, so the exhibitor would have to take 10 pictures in one group and 10 in another group when they are available?

Mr. RODGERS. No; it would not be worth the effort to try to go around the fence in order to get a few extra dollars; we go right down the line, and if the pictures are designated as 40 percent in one block they are designated that way to all producers.

And when you play 75 or 80 test engagements throughout the country you can get a pretty fair reaction of how that picture is going to be received. You can get, in dollars and cents, a comparison, and from that you determine what bracket it is going to be in. Of course, it may have been received more favorably with some playhouses than others; but, speaking generally, where a picture is received favorably in one section of the country, it is received favorably in another.

Mr. HINSHAW. From a showing of the pictures in these engagements you find that you have a fairly uniform test?

Mr. RODGERS. Generally speaking, it is. But that applies principally to us. Whether that would be true with others, I would not be in position to say.

Mr. HINSHAW. I am interested in one thing here particularly for the moment, and that is that we have complaints from the exhibitors that they are unable to reject the pictures that they do not want, and that they are unable to get pictures that they do want to show in their particular theaters, to their particular clientele, and I am interested in finding a way, if that be true, to correct that without upsetting the entire distribution.

Mr. RODGERS. Well, I think you can get a better reply from the theater owners who will be here to present their side of the case. I am sure, however, that most of the theater owners-those who have this arrangement-would not have the same trouble with this company.

The CHAIRMAN. Is that all?

Mr. HINSHAW. Yes.

The CHAIRMAN. The committee will stand adjourned until 10 o'clock tomorrow morning.

(Thereupon, at 4:15 p. m., an adjournment was taken until 10 a. m. of the following day, Friday, May 24, 1940.)

MOTION-PICTURE FILMS

FRIDAY, MAY 24, 1940

HOUSE OF REPRESENTATIVES,

COMMITTEE ON INTERSTATE AND FOREIGN COMMERCE,

Washington, D. C.

The committee met at 10 a. m., pursuant to adjournment, Hon. Clarence Lea (chairman) presiding.

The CHAIRMAN. The committee will come to order.
As I understand, Mr. Brandt is the next witness.

STATEMENT OF HARRY BRANDT, PRESIDENT, INDEPENDENT THEATER OWNERS ASSOCIATION OF NEW YORK, NEW YORK CITY

Mr. BRANDT. My name is Harry Brandt. I am president of the Independent Theater Owners Association of New York City, which has theater members in the five boroughs of New York City, in Westchester, Long Island, and New York State as far north as Poughkeepsie, and in Connecticut to Stamford, and in New Jersey as far as Paterson. Its 307 theater members are large and small, situated in both transient and residential areas, in thickly populated sections, in new developments and in small towns. Our organization is representative of every type of exhibitor operation and includes only independent theater owners; so that its opinions on the Neely bill come as a result of practical experience in the operation of motion-picture theaters all independently owned. The Independent Theater Owners Association of New York has voted unanimously against the passage of the Neely bill and has authorized me to make a statement to you to that effect.

Personally, I operate a chain of theaters which goes into practically every category of operation as enumerated above. In my 25 years in business I have at various times been interested in every type of theatrical presentation. I have produced legitimate shows and operettas. I am now trying to bring vaudeville back to New York. My circuit is known as the largest subsequent-run independent theater circuit in the country. I give you this so that you might know of my qualifications as a witness at these hearings.

The CHAIRMAN. I did not quite understand you. How many theaters join in this resolution against the bill?

Mr. BRANDT. Three hundred and seven.
The CHAIRMAN. They are all independents?
Mr. BRANDT. They are all independents.
The CHAIRMAN. Located in what States?

Mr. BRANDT. Located in the district known as the New York Exchange Territory, and that takes in a part of the State of New