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SIMPP v. Paramount Theatres
The Day that Detroit Became a Battlefield for Movie Monopolies
The independent producers who formed SIMPP, including Walt
Disney, David O. Selznick, and Samuel
Goldwyn, selected one of the most notorious Hollywood
theater monopolies to declare suit, in the first of what was planned to be a
long line of civil antitrust cases to expose monopoly and collect damages for
past independent films.
Excerpt from Hollywood Renegades by J. A. Aberdeen
In the late 1940s, the independent producers increased their antitrust
activity. According to David O. Selznick, the SIMPP vendetta began when he was
called over to Samuel Goldwyn's house for a meeting one night probably early in
1948.
Goldwyn, aggravated by many of the theater monopolies, wanted to discuss some
of the problems with Selznick, Edward Small, and Roy Disney. ("It might
have been Walt Disney," Selznick later said, concerning who was present
that meeting, "or it might have been Guenther Lessing [sic: Gunther
Lessing], but I think it was Roy Disney.") Goldwyn spoke about "a
particularly menacing and reprehensible situation in Detroit" where a
Paramount-affiliated theater chain had antagonized the independent producers for
years by dominating the first-run market in eastern Michigan. The producers
tentatively agreed to investigate the monopoly, and decided to involve SIMPP.
Paramount's Monopoly of Eastern Michigan
Robert J. Rubin spent several weeks putting together a preliminary report on
various "tight" situations across the nation where a potential theater
monopoly acted to the detriment of the independent producers. Hiring a special
economist to assist in the study, Rubin surveyed all over the country, locating
areas where the independent producers' films, on the whole, suffered from
depressed rentals. One of these places was eastern Michigan, where the key runs
were dominated by the United
Detroit Theatres Corporation controlled by Paramount Pictures, Inc. The
Rubin report uncovered evidence that would make Detroit an obvious target for
SIMPP's first civil antitrust suit, particularly while Paramount still owned the
theater chain. At the end of April 1948, just days before the Supreme Court Paramount
decision, Rubin reported his findings to the SIMPP Eastern Distribution
Committee.
The independent producers alleged that a monopoly was maintained in the
Michigan territory by the United Detroit Theatres, 75 percent owned by Paramount
Pictures, Inc., working in concert with the Cooperative Theatres of Michigan,
Inc., a booking organization which negotiated film rentals for its various
exhibitor member-stockholders. On paper, United Detroit controlled only four of
the seven first-run movie houses in the city. Yet two of the remaining three
were operated by the closely related, though separate, H. & E. Balaban
corporation. And not only were the United Detroit movie houses the highest
revenue-generating theatres in the region, but the collusion between United
Detroit and Cooperative Theatres gave Paramount control of 90 percent of all
subsequent-run revenue in the area.
CLICK HERE to read about the
history of Detroit theater monopoly.
The Detroit monopoly had a policy of denying percentage engagement
deals with the independent producers. In other areas producers were accustomed
to share with the exhibitors in a profit-sharing box office bonanza for their
popular movies. The independents attributed the overall deflated returns in
eastern Michigan to the parsimonious flat deal given by the high-handed
Paramount affiliate on a take-it-or-leave-it basis.
The Society of Independent Motion Picture Producers decided to start their
own private antitrust case to recover damages of lost revenue from United
Detroit Theatres and the Cooperative Theatres of Michigan. All legal costs would
be covered by SIMPP, and reimbursed to the Society out of the settlement. They
queried the producer-members, and found eight independents willing to take part
in the lawsuit to recover losses on specific films. The participants were Samuel
Goldwyn, Walt Disney, David O. Selznick, Walter
Wanger, William
Cagney, Edward Small, Benedict
Bogeaus, Hunt Stromberg, and Seymour
Nebenzal.
The suit was announced at three simultaneous press conferences in New York,
Detroit, and Hollywood on August 24, 1948. In coast-to-coast coverage, the
Society announced that war had been declared by the independent producers
against monopoly control in the industry. James
Mulvey presided at the New York City press conference handing out a
"pound or two of mimeographed material" to reporters gathered at the
Blue Room of the posh Essex House hotel. In Detroit Robert J. Rubin answered
questions shortly after he filed the case in Federal Court there. And in
Hollywood Gunther R. Lessing announced at
SIMPP's Beverly Hills headquarters that the case—independent producers suing
exhibitors—was "without precedent in motion picture history."
SIMPP claimed $2,917,272 in combined damages for the independent films listed
in the suit. However the treble damage clause of the Clayton Antitrust Act
multiplied the compensation three-fold to over $8.7 million plus attorney fees.
Goldwyn's $1.5 million share was the largest, and included films like The
Pride of the Yankees (1942), Up in Arms (1944), and The Best Years
of Our Lives (1946). The next largest was Walt Disney who claimed $974,000
for a film lot that contained all of his golden age full-length features from Snow
White and the Seven Dwarfs (1937) to Bambi (1942). Selznick featured
many of his most important 1940s films that United Artists distributed, such as
Hitchcock's Rebecca (1940), Spellbound (1945), and Since You
Went Away (1944).
Sam Goldwyn and Walt Disney Speak Out
The day after the case was filed, Goldwyn and Disney held a joint press
conference to confirm their trustbusting position. "The antitrust suit is
the opening gun in the fight of independent producers for freedom of the screen.
This is the first, but not the last action," Sam Goldwyn declared, as he
vowed that the independents would never rest until a free market existed for all
of their movies. "We do not intend to let theatre chains turn the silver
screen into an iron curtain between the public and our pictures."
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Sam
Goldwyn, during his anti-trust battles in the 1930s and 40s. (Aberdeen
collection). To purchase Aberdeen photos for reprint purposes click
here.
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Immediately after Goldwyn, Walt Disney spoke. He iterated his intentions to
always make high-quality groundbreaking films, and that his purpose of insisting
on a greater share of the profits was not to accumulate wealth but to stay in
business to make better films. He said that if SIMPP failed in its attempt to
return a free market for the independent filmmakers, the public would be subject
to "routine entertainment turned out on a veritable assembly line." He
characterized the independents as reluctant participants who were drawn into the
battle, "We now feel we can no longer afford to tolerate this situation and
are obliged to take legal action."
Other Monopolies
The basic legal precedent for the SIMPP lawsuit was the 1946 Jackson Park
Supreme Court case that dealt with the monopoly problems in the Chicago
territory. The small, independent Jackson Park theater, which had been in
operation since 1916, accused the Balaban & Katz exhibitor monopoly of an
aggressive double-feature policy, unreasonable clearance, and conspiracy with
the major studios. The independent exhibitor had originally sued for $120,000,
but as the case made its way through the courts, the small theater was awarded
nearly $1 million. SIMPP noted that of particular interest in the case was,
firstly, the courts' use of the Balaban & Katz gross ticket admissions as
the basis for the award and, secondly, the restraining orders issued against the
Paramount theater circuit in that region. SIMPP believed that the independents
could easily prove the discriminatory practices in the Detroit area by
highlighting the prosperous box office of the Paramount theaters there.
SIMPP's demands were not entirely monetary either. The lawsuit sought
injunctions against further monopolistic practice. SIMPP demanded the forced
sale of the United Detroit theater holdings and the dissolution of the
Cooperative. This was in harmony with the Society's longstanding belief that
monopoly control in the industry was not just vertical, but was epidemic on many
levels. If they could command a swift and absolute victory against the notorious
Detroit situation, the lawsuit—SIMPP hoped—would establish a pattern that
would bring other regional monopolies into capitulation, and encourage the
government as it followed through with the Paramount case. Immediately
SIMPP began to identify other regions of the country that would serve as the
next legal battlefront once the Detroit case was ended. Unfortunately SIMPP
v. United Detroit encountered unexpected problems that made the
open-and-shut-case a far more involved and drawn-out ordeal.
For information on the significance of the Detroit case - see:
SOURCES:
The Society of Independent Motion Picture Producers, et al
v. United Detroit Theatres Corp., et al, case number 7589, District Court of
the United States for the Eastern District of Michigan Southern Division
[hereafter: SIMPP v. United Detroit].
Meeting at Samuel Goldwyn's house: SIMPP v. United Detroit,
Deposition of David O. Selznick, April 28, 1949, pp. 96-100, AMPAS.
Rubin report on monopolies: Proof of Combination-Proof of
Damage, Richard V. Gilbert, consulting economist at Washington, D.C., to
Robert Rubin, April 13, 1948, AMPAS; "Indies Plan Screen Time Fight," HR,
April 28, 1948, pp. 1, 3.
Producers authorize SIMPP to initiate Michigan case: Walter
Wanger Pictures, Inc. to The Society of Independent Motion Picture Corporation,
July 21, 1948, pp. 1-2, WWP.
SIMPP announces Detroit case: "Producers Allege Movie
House Trust," NYT, August 25, 1948, p. 29; "SIMPP Sues Exhibs
For Millions," HR, August 25, 1948, pp. 1, 4; "Independent Film
Producers File Anti-trust Theater Suit," Daily News, August 25,
1948; "pound or two" and "without precedent":
"Exhibitors Monopoly, Too, Says SIMPP, Filing Suit," MPH,
August 28, 1948, p. 13.
Goldwyn-Disney press conference—"The antitrust suit
is": "Goldwyn Hits Theater Chains," Los Angeles Examiner,
August 26, 1948; "We do not intend": "60 Films Figure In Indie
Suit," DV, August 26, 1948; "routine entertainment turned
out" and "we now feel": "Free Screen Object of SIMPP Suit,
Assert Goldwyn, Disney," HR, August 26, 1948, pp. 1, 11. Also see
"Exhibitors Monopoly, Too, Says SIMPP, Filing Suit," p. 13.
Jackson Park case: see Conant, Antitrust
in the Motion Picture Industry, pp. 161-177. Bigelow v. RKO Radio
Pictures, 327 U.S. 251 (1946).
See Bibliography.
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