The Famous Players-Lasky Antitrust Case
Behind-the-scenes Intrigue at Paramount
Testimony of Al Lichtman
New York Telegraph - April 26, 1923:
Al Lichtman, president of Preferred Pictures, yesterday told how W. W.
Hodkinson, president of the Paramount Pictures Corporation in 1916, was forced
out of office by the board of directors after Adolph Zukor, head of Famous
Players, had complained that he could not get along with them. . . .
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The
Paramount Braintrust: Portrait of the Famous Players-Lasky team
shortly after their takeover of Paramount in 1916. Jesse L. Lasky,
Adolph Zukor, Sam Goldfish (Goldwyn), Cecil B. DeMille, and Al
Kaufman.
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The witness traced the development of the Paramount organization from its
start as a group of distributors to the present time, when it is interwoven
closely with the Famous Players-Lasky forces and financial backing.
Lichtman, who was field manager for Famous Players in 1912, declared the
company entered into a distributing agreement with the then newly organized
Paramount Corporation for twenty-five years.
Early in 1916, the witness said, Mr. Zukor had become dissatisfied because he
said that under the arrangement with the Paramount he was not receiving money
enough to produce the kind of pictures he wanted and that he was threatened with
the loss of some of his great stars, especially Mary
Pickford. Zukor had told
him, the witness said, that Mutual had offered Mary Pickford $10,000 a week.
The witness said it was at about this time, after a visit of Zukor to
California, that he got in touch with Hiram Abrams, a director of the Paramount
company. He repeated to Abrams that Zukor had expressed himself dissatisfied
with the contract with Paramount. Zukor said, according to the witness, that if
he stayed with Paramount he would be unable to keep his stars and maintain the
quality of the pictures he was making.
The witness said that Abrams went with the latter's partner, Walter Green,
and himself to see Zukor at his home. They had a conference, he said, in the
course of which Zukor declared he found it impossible to get along with
Hodkinson, and it was agreed among them that Abrams and Green were to see if
they could not get two of the other four directors to vote with Abrams in
deposing Hodkinson. Ten days later, Lichtman said, he learned that a meeting had
been held and Abrams, Steele and Sherry, three of the five directors of the
company, had voted to put Hodkinson out of the presidency, had elected Abrams
president in his place, and elected Steele treasurer.
Lichtman was asked about his own pictures. He said he was producing and
distributing Preferred Pictures at this time and has twelve a year, all feature
pictures. He spoke of the difficulty he has in some cities in placing his films
in first run theatres owing to the fact that most of the first class houses are
owned or controlled by the big producers.
He got along all right in San Francisco, he said, but characterized
conditions in Atlanta as "terrible," saying Southern Enterprises, a
subsidiary of the Famous Players-Lasky Corporation, controls three of the five
theatres in the city. . . .
As to New York, Mr. Lichtman said, he had only succeeded in placing on
Broadway four pictures in the last two years out of twenty-four pictures. . . .
The witness said that, generally speaking, a producer expects about 25 per
cent of the gross earning of a picture from first run theatres.
Mr. Lichtman told of a number of places where the Famous Players-Lasky
Corporation or some other large producer owning first run theatres would reject
pictures offered by an independent producer on the plea that they had no open
time. He mentioned theatres in various cities which, while not owned by one of
the large producing companies, would use all the pictures made by one of those
companies, leaving only a small amount of time available to all the others. . .
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He was asked if he knew H. E. H. Conick, and said he had met him in 1919 when
the latter had come to the office of the Famous Players-Lasky Corporation to
investigated the corporation in the interest of a group of bankers who were
considering underwriting a stock issue of $10,000,000. He said Mr. Conick was
shown every consideration, allowed to examine the records; that later the sale
of stock was made, and, still later, Conick became chairman of the finance
committee of the Famous Players-Lasky Corporation, and was still holding that
position when he left the corporation in 1921.
The witness said the intention of the corporation when it secured the
$10,000,000 was to use the money to build or purchase a theatre in
"key" cities of the country, where it was impossible to get
advantageous contracts. . . .
He said there are thirty "key" cities in the country and
approximately 120 first-class first-run theatres in those cities.
New York Telegraph - April 27, 1923:
Mr. Lichtman said there are approximately 14,000 moving picture theatres in
the United States, seating about 8,000,000 persons, and he estimated that about
10,000,000 persons attended performances daily as conditions are now. He said
conditions now are only fairly prosperous: that in 1920 and also in part of 1918
more persons witnessed the pictures daily. . . . Asked to state the condition
confronting the independent producer and distributor as compared with the
producer and distributor who owns or controls a number of theatres, the witness
said: "The small producer is at a disadvantage, for the producer who owns
theatres can figure fairly well on what his receipts at first will be."
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