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—— aod ws a a oe ines . 4 + ' 7 a F ? y 7 i i 4 APRIL 14,1947. 5 There is big money in the system. The movie companies have found prof- its can go up even when the number of Pictures is cut down. In 1941, 353 fea- tures were released by seven of the eight major companies and the net profit after taxes for all operations—produc- _. tion, distribution and exhibition—totaled $35,491,000. In 1946, the total annual output of the seven had dwindled to 232 pictures, and estimated net profits, with booming theatre attendance, had climbed to $123.7 million. It pays to starve the market. And since the market itself was controlled as outlined above, the exhibitor used to have no recourse to fresh sources of supply. He still doesn’t—but relief is in sight. The o pening gun TY WAS this system that William Goldman tackled, with full knowl- edge of what he was getting into. He prepared for it by building up a small chain of neighborhood houses in Philadelphia and outlying towns, which together supplied him with a tidy kitty running into six figures annually. He had one advantage: ini the projected struggié—He' knew, “as an associate said, “where all the bodies were buried.” Six years as head of the Warner circuit in eastern Pennsylvania had given him a clear understanding of how the other side worked. In St. Louis, before coming to Philadelphia in 1928, he had built up two successive theatre chains, had fought against and then worked with the Skouras brothers (Spyros Skouras now heads Twentieth Century-Fox), and had put in some time as chain manager for Paramount. He was a seasoned war- rior. The kickoff came in 1940, At that time, Warner Brothers was having one of its periodic spats with Paramount Pictures over treatment of Paramount's product in Philadelphia. Paramount then had a backlog of almost a year's un- played pictures waiting to get into the area. Goldman extracted a promise from Neil Agnew, Paramount executive, that Goldman could get Paramount features first-run if he could find a good theatre for them, Goldman forthwith started negotiations for the Erlanger, a vast and luxurious amusement hall closed during most of the depression, NUMBER OF FEATURES RELEASED tL But in the meantime Warner Brothers had got wind of the deal. According to Goldman's testimony in the subsequent trial, Harry Warner got into a huddle with Barney Balaban, president of Para- mount, and told him a break in Phila- delphia would mean a break throughout the United States. As a’ result, Gold- man testified, Paramount and Warners patched up their differences, leaving Goldman with a theatre and no pictures. During 1941 and most of 1942 Gold- tan bombarded the distributors with letters, telegrams, phone calls and visits in an effort to get first-run shows for the Erlanger. He was consistently turned down by all the exchanges. “As you know,” wrote Charles Zagrans, RKO's branch manager, in 2 typical refusal on October 28, 1941, “Warner Brothers has been our estab- lished customer for the exhibition of our pictures first-run downtown Phila- delphia.” He went on to say that there- fore RKO would continue to deal with Warner Brothers “as ia the past.” Earlier, and Jess formally, Zagrans put it in a nutshell for Goldman during a luncheon conversation, aconcding to Goldman's testimony. “Well, Bill,” be said, “there is no use kidding you. You know what the setup is. If we make a deal with you, Warners will penalize us in the subsequent-run theatres, and CCECUCs |) iam FUCCEEEC Cc FEE: CUCU AE CUCU EL CUCU SEL LARERERA RAR in his heart—and in his files—and on ne NET PROFITS AFTER TAXES (la Millions) < Charts by Grophics Institute, N.Y.C. $2) os A that will be very harmful to our in-< terests,’” Fs Goldman treasured all these things: | ‘wei, December 8, 1912, sprang his big play. 4 He filed suit against the cight big pro- ; ducer-distributors and their exhibitor: affiliates in the Philadelphia area, asking” ’ $1,350,000 in triple damages for loss” of profits at the Erlanger during two years. The suit charged that the Erlanger ‘: bad been refused permission to exhibit. first-run pictures “by reason of an illegal * combination and conspiracy to monopo- : lize the entire motion-picture industry, © particularly in the Philadelphia district.” - Goldman's extensive, if unproductive, letter writing, of the previous two years . - now showed its value. He was able to “| produce in court almost identical letters : from local representatives of the big «, producer-distributors, denying him films © at a time when there were films to buen, © films drying up in the vaults because of |: the first-run bottleneck maintained aod enforced by Warner Brothers. On April 8, 1944, Federal Judge ‘ William £1. Kirkpatrick of the US Dis- : trict Couit dismissed the case. “While - Warner Brothers undoubtedly has a monopoly in the Philadelphia area in |’ the showing of Grst-run pictures,” he tuled, “the monopoly is not illegal.” 3 2 Goldman appealed—but He was uot | Me