MOTION-PICTURE FILMS FRIDAY, MAY 31, 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 F. Lea (chairman) presiding. The CHAIRMAN. The committee will please be in order. I understand that the next witness is Mr. Zeitz. STATEMENT OF HARRY ZEITZ, NEW BEDFORD, MASS. Mr. ZEITZ. Mr. Chairman, my name is Harry Zeitz. I operate the State, Empire, and New Bedford Theaters, New Bedford, Mass. I have always bought my pictures 1, 2, 3, 5, and 10 years in advance and have never had any trouble with the distributors; no trouble whatsoever in canceling pictures now and then that seemed to be objectionable. My story is very short. That is all I have to say. Mr. ZEITZ. New Bedford, Mass. I am a neighbor of Mr. Yamins. He is in Fall River, Mass. I can see why Mr. Yamins likes to buy pictures one at a time. He has a closed situation and naturally can pick his product and they have to sell him what he wants, or he does not buy, whereas we are in an open situaition. We have chain competition, the Publix, and I am independent, and I find it advantageous to buy pictures in advance and be sure of a product, especially a steady flow of product. The CHAIRMAN. You run just one theater? Mr. ZEITZ. Three theaters. The CHAIRMAN. Are they small theaters? Mr. ZEITZ. No; 1,500 seats, 1,700 seats, and 1,800 seats. The CHAIRMAN. All in one city? Mr. ZEITZ. One city; two first-runs and one second-run. The CHAIRMAN. Is that all you have to say? Mr. ZEITZ. That is all. The CHAIRMAN. Than you. Mr. ZEITZ. Thank you. The CHAIRMAN. Mr. Green. STATEMENT OF FRED GREEN, WOONSOCKET, R. I. Mr. GREEN. Mr. Chairman, my name is Fred Green. I operate two theaters in Woonsocket, R. I. I have been listening to these arguments on the Neely bill for the last 2 days, and I just want to put in my appearance here and say that I also am opposed to the Neely bill for the same reasons that the people here before me have stated. I also, like Mr. Zeitz, buy a franchise contract, which, of course, the Neely bill will eliminate, in my opinion. I also have chain competition, and I think this will put me in a very poor competitive condition. The CHAIRMAN. In what city do you operate? Mr. GREEN. I operate two theaters; one 7 days a week and the other 1 day, sometimes 2 days, and sometimes 3 days. The CHAIRMAN. What city? Mr. GREEN. Woonsocket, R. I. STATEMENT OF ROY T. M'MINN, SUPERIOR, WIS. The CHAIRMAN. Mr. McMinn. Mr. McMINN. Mr. Chairman, my name is Roy T. McMinn. I operate a theater at Superior, Wis. I operate as an independent, not affiliated with any organization or chain of any kind. In fact, I operate in opposition to the Publix at Superior, Wis. I am opposed to this bill for various reasons. My main reason is this, that we usually buy pictures in block and over a period of 4 or 5 years. Under the Neely bill we would undoubtedly find ourselves in this position: The Publix could come in and pick off the top pictures, the cream pictures, which would leave us with the lesser pictures. As it now stands, we have a contract with RKO, Universal, and Columbia. These contracts were made for the period of 5 years with RKO and Universal, and a period of 3 years with Columbia. We operated a 350-seat house and at that time bought our product from year to year. About 2 years ago we built a 600-seat house and in the new house we have an investment of about $100,000. Prior to building this new house, we went from the 1-year buying of products, a year at a time, to the system of buying products over the period of 5 years, or as many years as we could get. We felt that this gave us greater protection. I am opposed to this bill because I feel if it were passed it would place us in a very difficult position in our pictures. We would have to bid for pictures, one picture at a time, and very possibly we would wind up with the lesser pictures. I do feel that what we need, and need badly, is a 20 percent elimination. That would give us the protection we need and would allow us to eliminate the pictures that might be objectionable or would prove unprofitable. The CHAIRMAN. You want that 20 percent based upon the number of pictures contracted for? Mr. McMINN. In 1 year; from one company. The CHAIRMAN. On the number of pictures contracted for? Mr. McMINN. Yes, sir. The CHAIRMAN. Well, how would that work from the money standpoint; the 20 percent of the pictures, the big ones, might be over 50 percent of the amount involved? Mr. McMINN. No; the costliest pictures we run, they release anywhere from 30 to 48 pictures per year. The CHAIRMAN. Well, do you not contract for a few pictures that are quite expensive, as compared with others? Mr. McMINN. Well, we do; but they are all in one group. The CHAIRMAN. I take it that those have different valuations in fixing the amount they charge you, and they must consider the value of these various films included in the contract, and then if you had the privilege of eliminating 20 percent, whether the large or small ones, it would seem that there might be a difficulty about that kind of an adjustment. I do not know that there would be, but it seems that there might be. Do you understand what I mean? Mr. McMINN. Yes, I think I do. What you mean is it would raise the cost of the film to me? The CHAIRMAN. Well, what I mean is one film might be worth $15 to you, and another might be worth $60, and if you discarded films, had the privilege of discarding films, according to the number of the films without regard to the cost, why, the 20 percent would not mean much so far as the money equation is concerned, if you had the privilege of discarding the more expensive films. Mr. McMINN. Well, the producers take care of that very well in their contracts. They protect themselves along that line, and if there was a 20-percent elimination clause in the contract, it would be so many pictures could be eliminated from each bracket. You would never be permitted to eliminate all of the top pictures or all of the expensive pictures. The CHAIRMAN. All right; is that all that you want to say? Mr. McMINN. Yes, sir. The CHAIRMAN. Thank you. Mr. McMINN. Thank you. STATEMENT OF H. R. BERRY, HARTSVILLE, S. C. The CHAIRMAN. Mr. Berry. Mr. BERRY. Mr. Chairman, my name is H. R. Berry. I live in Hartsville, S. C. I am an independent theater owner and am presiIdent of the North and South Carolina Theater Owners Association. This association is a local exhibitors' organization covering North and South Carolina, representing around 400 theaters, and our dues in this organization run from $5 to $60 per year, according to the size of the town. We have one paid employee-secretary. We maintain an office in Charlotte, N. C. I would like to read for the record the following resolution: Whereas the Theater Owners of North and South Carolina, at its convention at Myrtle Beach, S. C., in June 1939 did officially go on record as being unanimously opposed to the Neely bill; And whereas this board believes the enactment of that bill into law would be contrary to the best interests of motion picture theaters and to the members of this organization and that its enactment should be prevented: Therefore the board of directors of the Theater Owners of North and South Carolina in executive session this the 8th day of May 1940, hereby directs that our president, H. R. Berry, appear before the congressional committee holding hearings on the Neely bill on or about May 13, 1940, in Washington, D. C., and there to oppose strenuously this proposed legislation. BOARD OF DIRECTORS, THEATRE OWNERS OF NORTH AND SOUTH CAROLINA, INC. Gentlemen, I feel that I have a very definite interest in the motionpicture industry. I have been engaged in the exhibiting end of this business for 22 years. I have a representative amount of money invested in this business that I am interested in protecting against destructive practices just as you would try to protect your best interests. The exhibitor, the distributor, and the producer all have the same thing in common-our business. We exhibitors, showing motion pictures, advertise and present upon our screens, stars and personalities, and to my way of thinking this gives us some equity in the personalities that are developed. Precedent being a deciding factor in all past experiences in film trading, it was an absolute fact that our 1938-39 contract totaled an aggregate sum of $908 for 38 pictures. This was what we termed a selective contract and carried no cancelation privileges as we had definitely committed ourselves to use 38 pictures or pay the total sum of $908. I would like to pause here for a moment and explain the following: September 1, 1939, which is the beginning of our trading season, up until February 7, 1940, I was canvassed by this company's representative and three propositions were offered me. The first proposition was 24 pictures aggregating a total sum of $1,360 and classified as follows: Eight at $70, total $560; eight at $60, total $480; eight at $40, total $320. Of course, that proposition was so ridiculous that I rejected it. In the course of the conversation he offered me another proposition. This was: Eight pictures at $30, total $240; 8 pictures at $25, making $200; 8 pictures at $16, making $128; 10 pictures at $30, making $300; 4 pictures at $35 against 35 percent of ticket sales, $140. This proposition was the identical number of pictures bought in 1938-39, but carried approximately a 10-percent increase, and the salesman stated that the reason for this 10-percent increase was on account of increased cost in production. I refused this proposition, so after 9 hours of deliberation the salesman finally agreed that if I would buy the entire number of releases that his company had scheduled for release during the coming year, he could work out a schedule that would not exceed the $908 paid for the 38 pictures the previous year. I asked him if he meant he would sell me the total 48 pictures which his company had scheduled for release for $908. His answer was "Yes" and the third proposition was as follows: Four pictures at $35, against 35 percent of box-office sales, $140; 20 pictures at $15, total $300; 8 pictures at $25, total $200; 8 pictures at $17.50, total $140; 8 pictures at $16, total $128; the total amount of the contract being $908, which included 48 releases, the total output of this company. To be exact, knowing that that company would not release two of the $35 pictures, and that a cancelation of 10 percent of the features would eliminate 5 more and in all probability they would be short at least 5 more pictures at the end of the year, these three factors, totaling $145, plus the privilege of playing 10 more pictures, deducted from the $908, leaves a net definite commitment of $763 for 41 pictures as against $908 for 38 in last year's contract. As I understand section 3 of the Neely bill, we would not be able to use any trading in a transaction of this nature, whereby we could avail ourselves of eliminations, as we would be strait-jacketed by the provisions of that section. The CHAIRMAN. In that connection, what do you mean by "straitjacketed"? Mr. BERRY. Well, we have section 3 which prescribes how they shall sell us, and it makes it unlawful to give us any inducement to buy more than two pictures, under heavy penalties, fines. That is my understanding. The CHAIRMAN. Does not that section permit you to buy any number you can contract for? The only prhoibition in that section is against being compelled to buy anything you do not want in order to get the ones you do want. Mr. BERRY. Mr. Chairman, I do not understand the bill that way. The proponents of this bill say it can be done, but if I understand the thing, the way we have figured it out in an attempt to understand itand I have been sitting here 3 weeks trying to find somebody who would explain that to me and I have not been able to do it-if a man cannot sell to us, how are you going to buy? If a producer cannot sell us under the penalty, there is no chance in the world for us to buy then, I do not think. That is my interpretation of it. I could be wrong. I think there are 400 others in the same position I am in, in our territory. The CHAIRMAN. I do not see how you could reach that conclusion, but go ahead. Mr. BERRY. Gentlemen, I come before this committee at the request of my exhibitor members and because we are opposed to this legislation. I want to state, in order to get the records straight, that I am representing a group of exhibitors, the majority of whom are independents, but there are two affiliated members in our association; that I am not classed in any selective group; that I have no opposition, and that I am not a victim of false or any misleading propaganda. I am acting entirely on what I personally have dug out of this bill with the assistance of the board of directors. I have heard most of the testimony before this committee and have followed questions and answers carefully that have been brought out here during the examination of the proponents, and I am still convinced that this legislation is unnecessary. If the bill could be worked out in practice what the exhibitor proponents claim, it would be a fine set-up, but to the contrary we believe it will be detrimental to the theater owners and especially to the smaller exhibitors. When a groceryman buys a barrel of apples, he knows that he is going to get some apples that are not going to be worth as much as the ones on top, but he buys at a price whereby he can make money on the barrel as a whole. The same theory applies in buying motion pictures. It is my opinion that if you will take section 4 out of the bill all the producers and distributors will be supporting the bill, for the provision in section 3 is certainly in their favor but will be harmful to the small exhibitors. 235749-40-pt. 2—26 |