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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.
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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.
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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."
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Hobart
Bosworth in 1926.
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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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