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APRIL 14, 1947 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 teleased by seven of the eight Major companies and the net ptofit 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, hid 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 stil! doesn’t—but relief is in sight. The opening gun. T 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 in the projécted strugglé—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 watr- tior, The kickoff cane in 1940. At that time, Warner Brothers was having one of its periodic spats with Paramount Pictures over treatment of Paramount's ptoduct in Philadelphia. Paramount then had a backlog of almost a yeai’s un- played pictures waiting to get into the atea. 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 By 7 Major Companies TUCUCCU NET PROVIIS AFTER TAKES (in Millions) Of 7 Major Compantes $35.5 rrr sa |S 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 Batney Balaban, president of Para- fount, 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- man 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 a typical refisal 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 in the past.” Earlier, and less formally, Zagtans put it in a nutshell for Goldman during . a luncheon conversation, acaording to Goldman’s testimony. “Well, Bill,” he 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 at 7 Charts by Graphics Institute, N.Y.C, that will be very harmful to our in- terests.”” Goldman treasured all these things in his heart—and in his files—and on December 8, 1942, sptang his big play. He filed suit against the eight 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 ‘had 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 burn, films drying up in the vaults because of the first-tun bottleneck maintained and enforced by Warner Brothers, On April 8, 1944, Federal Judge William H. Kirkpatrick of the US Dis- trict Court dismissed the case, “While Warner Brothers undoubtedly has a monopoly in the Philadelphia area in the showing of first-run pictures,” he tuled, “the monopoly is not illegal.” Goldman appealed—but he wes not e