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The Famous Players-Lasky Antitrust Case

"Acts to Dissolve Big Lasky Concern as 'Movie Trust' "

New York World - September 1, 1921

Washington, Aug. 31—Describing it as the "largest concern in the motion picture industry and the biggest theatre owner in the world," the Federal Trade Commission has formally charged the Famous Players-Lasky Corporation and eleven other correspondents with "conspiracy and restraint of trade" in violation of the anti-trust laws.

Those named with the Lasky Corporation are the Stanley Company of America, the Stanley Booking Corporation, Black New England Theatres, Inc., Southern Enterprises, Inc., Sanger Amusement Company, Adolph Zukor, Jesse L. Lasky, Jules Mastenbaum, Alfred S. Black, Stephen A. Lynch and Ernest V. Richards Jr.

The respondents, a formal announcement of the commission asserts, are given thirty days to answer the specific allegations in the complaint, after which the date of the trial of the charges will be set.

The complaint, as made public today, alleges that "as a result of the conspiracies and combinations set out and the acquisitions and affiliations made in pursuance of said conspiracies and combinations, the respondent, the Famous Players-Lasky Corporation, now owns more than four hundred theatres in the United States and Canada, and has numerous others affiliated with it.

"It has formed producing companies in Great Britain, France, Belgium, Spain, Scandinavian countries, Poland, Czecho-Slovakia and a $3,000,000 corporation for the production and distribution of motion pictures in India."

The complaint declares that "in furtherance of the conspiracy charged, the Famous Players-Lasky Corporation acquired the New York Theatre Building, containing the Criterion, the New York Theatre and the New York Roof, at a cost of $3,200,000; that the respondents acquired the Rivoli and Rialto, in the same district of New York, as well as the property on which the Putnam Building is located, where it proposed in the near future to erect a thirty- story building to cost $8,000,000 and to contain a motion picture theatre."

"The Famous Players-Lasky Corporation," it is stated, "also acquired the stock of Charles Frohman, Inc., which leases the Empire Theatre and has an interest in the Lyceum Theatre.

It is charged by the commission that the producing and distribution of more than 30,000 films every week by the respondent, from its studios in California and New York principally and the transportation of great quantities of unexposed films and large quantities of scenery, paraphernalia, costumes and similar stage properties give the commission jurisdiction.

Hobart Bosworth -  the actor-turned-film entreprenuer whose movie company became part of the 1916 Famous Players-Lasky merger and subsequent takeover of Paramount Pictures. (Aberdeen collection). To purchase Aberdeen photos for reprint purposes click here.

In the calendar year, it is asserted, approximately 18,000 theatres exhibited motion pictures in the United States and 20,000,000 people every day spend $4,000,000 to see pictures. In 1916 the motion picture industry was in the hands of three different units, none of which was affiliated with each other--producers, distributors and exhibitors.

"The Famous Players-Lasky Corporation, Adolph Zukor and Jesse L. Lasky, combined and conspired to secure control and monopolize the motion picture industry, and restrain, restrict and suppress competition in interstate commerce in motion picture films," said the announcement of the commission today. "In pursuance of this conspiracy and combination, the complaint charges that the respondents acquired in 1916 Bosworth, Inc.; Jesse L. Lasky Feature and Play Company and the Famous Players' Film Company, and that since the time of such acquisition the Famous Players-Lasky Corporation has and still owns the whole of the stock of the firms mentioned, and that the effect of such acquisition has eliminated competition between such corporations and tends to create a monopoly in such commerce in the motion picture industry."

Hobart Bosworth in 1926.

It is charged that "prior to the incorporation of the Famous Players- Lasky Corporation in July, 1916, the three concerns mentioned released and distributed all of their pictures films through Paramount Pictures Corporation, New York, the only organization of the kind that had facilities for nationwide distribution."

Paramount Pictures were well known to exhibitors and the public. The Paramount concern had a "closed booking" policy. Its pictures were leased on the condition that the entire lot of 104 would be taken and the person using them would not exhibit pictures of any competitor." This arrangement applied to the first run.

"Under this plan," the commission says, "no exhibitor could lease a single first run, but as to the second and third runs, a different policy was pursued. While there was no competition among Bosworth, Inc., Jesse L. Lasky Feature and Play Company and the Famous Players Film Company for the leasing of films for first runs, there was free and open competition for the second and third runs or repeats."

In furtherance of its conspiracy, the commission asserts, the Famous Players-Lasky Company, through its President, Mr. Zukor, sought to acquire the Paramount Pictures Corporation.

"Failing to do so, and to avoid former contracts," the announcement says, "Zukor incorporated the Artcraft Picture Corporation in 1916, which corporation engaged in competition with the Paramount Corporation in leasing and distributing motion picture films.

"At the time of its organization the Famous Players-Lasky Corporation employed many popular film stars, and as the contracts with certain of these expired they were not re-engaged by the respondent. Instead the respondent and Adolph Zukor organized certain new corporations and induced the stars to make service contracts with these newly formed corporations, which corporations the respondent and Zukor caused to contract with the Artcraft Pictures Corporation, whereby all films depicting the stars were exclusively leased and distributed through the Artcraft Pictures Corporation instead of the through the Paramount Pictures Corporation.

"Shortly thereafter the Paramount Corporation, because of the threatened impairment of the value of their holdings through the loss of pictures depicting these stars, became desirous of disposing of their holdings, and in 1916 the Famous Players-Lasky Corporation acquired the whole of the stock and share of the capital of the Paramount, the concern which had been in competition with the Artcraft Pictures Corporation."

The complaint declares that "the effect of this acquisition of the Paramount Corporation by the Famous Players-Lasky Corporation has been and is to eliminate competition in interstate commerce, and that it tends to create a monopoly, and that after the acquisition mentioned both the Paramount Corporation and the Artcraft Pictures Corporation ceased to function and were dissolved, and that thereafter the Famous Players-Lasky Corporation, in addition to producing films, entered the business of leasing and distributing such films directly to distributors without employing the medium of any distributing agency, and advertised to the trade and public film as Paramount Artcraft Pictures and Paramount Pictures."

The commission then described the extension of the "alleged conspiracy" to the producers.

It is set out that "after the respondent had acquired the concerns mentioned, and pursued the conspiracy and combination to control the motion picture industry, it inaugurated a policy of affiliating with it certain independent producers whose productions were of such quality and popularity that they were in great demand."

It further declares that "such independent producers" by contract "Leased and distributed their films through the respondent corporation" and in the same manner as the respondent's films, and that these independent productions are advertised and displayed as Paramount-Artcraft Pictures and Paramount Pictures.

"These independents are Thomas H. Ince, Mack Sennett, Cosmopolitan Productions, Mayflower Productions, George Fitzmaurice Productions, Sydney Chaplin Productions, Lois Weber Productions, William D. Taylor Productions, George Milford Productions, William A. Brady Productions.

"The commission charges that "In May, 1919, in accordance with the conspiracy the respondents incorporated the Realart Pictures Corporation and caused the Realart Pictures Corporation to maintain offices, exchanges and a selling organization separate from that of the Famous Players-Lasky Corporation, and concealed the respondent's ownership of the Realart Pictures Corporation, holding the latter out to the trade and public to be wholly independent and not affiliated or connected in any way with the respondents; and that many exhibitors who did not desire to lease Famous Players-Lasky films, did lease Realart Pictures Corporation films in the belief that they were not made or produced by the Famous Players-Lasky Corporation."

Acquisition of motion picture theatres through coercion and intimidation of owners into selling their theatres after threats of erecting competing houses and of interfering with their film service as a furtherance of the conspiracy alleged is charged.

It is declared that in 1919 "the respondents entered into a comprehensive plan of extending the corporation's activities by the acquisition of theatres, particularly in the key cities. In pursuance of this programme, the respondents conspired, the complaint alleges, with the Black New England Theatres, Inc., of which Alfred S. Black is President, to secure control of the distribution and exhibition of motion pictures in Maine, New Hampshire, Vermont and Massachusetts, and that by acquisition of 50 per cent of the stock of the Black New England Theatres, Inc., the respondent controls more than sixty theatres in the states mentioned."

The complaint declares that further pursing this programme the respondents "conspired with the Stanley Company of America, which owned or controlled more than fifty-seven theatres in Pennsylvania, Western New Jersey and Delaware; and with the Stanley Booking Corporation, owned by the Stanley Company of America, to secure control of the motion picture industry in this territory, and that as a result of this conspiracy the Paramount Pictures and Paramount-Artcraft Pictures are either shown exclusively or are given preference over others in the territory, and that well-known independent producers are either entirely excluded or are only able to lease their films at a loss or under undesirable conditions."

The same programme was followed, the complaint charges, as regards the Stephen A. Lynch Enterprises Corporation, which owns and operates theatres in the Atlantic and Gulf States from North Carolina to Texas and in Tennessee, Arkansas and Oklahoma.

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