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MOVING-PICTURE SCREEN AND RADIO PROPAGANDA

WEDNESDAY, SEPTEMBER 24, 1941

UNITED STATES SENATE,

SUBCOMMITTEE OF THE

COMMITTEE ON INTERSTATE COMMERCE,

Washington, D. C.

The subcommittee met, pursuant to adjournment on yesterday, at 10:30 a. m., in the caucus room, Senate Office Building, Senator D. Worth Clark presiding.

Present: Senators Clark of Idaho (chairman of the subcommittee), McFarland, Tobey, and Brooks.

Senator CLARK of Idaho (chairman of the subcommittee). The subcommittee will please come to order. Senator Brooks will be delayed for about half an hour but we will proceed without him.

Does any member of the subcommittee have any questions or observations to make before I resume some questions?

Senator MCFARLAND. Mr. Chairman, I have another telegram I have been requested to introduce. It seems that I made a mistake yesterday when I said we were getting down to the real meat of this situation. We seem to have arrived at the real issue now, according to this telegram which I am requested to read in evidence. This is addressed to myself and reads as follows:

As long as telegrams are being introduced into testimony, I feel I have a right to ask that you include this one. During my recent Washington testimony I made no issue of the Alice Faye gown matter

[Laughter.]

I continue reading:

but now that the subject has been raised at such unfair cost to the shop partly owned by Mrs. Fidler, I think I am entitled to tell the true story. Two years ago the Harry Brands and Fidlers were very good friends. We often dined together, exchanged gifts on birthdays and such occasions, and were, I thought, intimate friends aside from business. About 2 years ago Mrs. Fidler and Gladys Parker, New York designer, opened a dress shop in Hollywood. Soon after the opening, the Brands were dinner guests in our home, and Mr. Brand, a very able publicity man, conceived the idea of having the shop make special gowns designed for starts whose films were having Hollywood premieres. The idea was to name the gown after the star's screen roles, so the shop would profit by the resultant publicity when photographers, as is the Hollywood custom, made snaps of these stars at the premieres. "I'll get you Alice Faye," Brand said, "because her picture, Hollywood Cavalcade, will be premiered soon." It was a friendly gesture on his part and accepted by us as such. It was he who approached Miss Faye. The gown was widely photographed, and both the shop and Miss Faye received much publicity. As for Brand's unfair charge that it fell apart at the first wearing and caused Miss Faye humiliation, that is not true.

[Laughter.]

267

I continue reading from the telegram:

Mrs. Fidler and I and many friends attended the opening and we also attended the dinner immediately following. Miss Faye was much in evidence at both places

[Laughter and applause.]

Senator TOBEY. Does that mean both north and south?

Senator MCFARLAND. The telegram will have to speak for itself. 1 will say that I have gotten as deeply into this gown matter as I can. I continue reading from the telegram:

and the gown was largely praised. The shop informs me that Miss Faye did not pay her bill until 40 days later. She had ample time to report any faults or request any repairs or changes, if such were needed. If such a thing as Brand describes happened, why did Mrs. Brand, 60 days later, give a cocktail party, for 50 of her personal friends to introduce Parker gowns? The shop, owned by Miss Parker and Mrs. Fidler, designs gowns for Marlene Dietrich, Lana Turner, Joan Crawford, Greer Garson, Barbara Stanwyck, and many more stars. Is it not strange that garments purchased by these other stars did not fall apart? I request that this telegram be read, because introduction of Brand's unfair wire into testimony has resulted in front-page publicity that can be very damaging to the Parker shop if it is not immediately refuted. I know you would not want that. Thank you both for this courtesy and for your courtesy during my Washington testimony.

And that is signed "Jimmie Fidler."

Senator CLARK of Idaho. May we have order, please, and we will proceed with the testimony.

TESTIMONY OF NICHOLAS M. SCHENCK, PRESIDENT, LOEW'S, INC., LOS ANGELES, CALIF.-Resumed

Senator CLARK of Idaho. Now, Mr. Schenck, I am going to go to some extent, I hope not too long, into the question of exhibitions and the connection between the major producers and the various exhibitors throughout the country.

Mr. SCHENCK. All right.

Senator CLARK of Idaho. I think you more or less agreed yesterday that there are in the neighborhood of 3,000 theaters owned either outright or in partnership by the five companies which have been discussed. That is about right, is it not?

Mr. SCHENCK. Yes.

Senator CLARK of Idaho. And then I asked you a question which you said you would sort of have to think over. Do you recall that question? I have it written down and maybe I can refresh your

memory.

Mr. SCHENCK. Yes. It was in reference to whether these people have all the key cities.

Senator CLARK of Idaho. I wrote it down, but do not seem to find it. Mr. SCHENCK. I am quite sure that is what you asked me. But I have had no opportunity to check on that. It would take a little time to do it.

Senator CLARK of Idaho. You have not had an opportunity as yet to check on that?

Mr. SCHENCK. No, sir. I would have to contact New York on that. Senator CLARK of Idaho. I think we did agree that the great bulk of those 3,000 theaters were so-called metropolitan first-run theaters in key and other large cities.

Mr. SCHENCK. No; I do not think we agreed on that.

I said that

the biggest part of them are smaller theaters, although there are quite a large number of large theaters in key cities.

Senator CLARK of Idaho. There are approximately, and I think we agreed on it or can agree, 17,000 to 18,000 theaters in the United States. Mr. SCHENCK. That is correct, sir.

Senator CLARK of Idaho. Now, I am going to read to you a paragraph and then follow it up more thoroughly and ask you for any comments you may care to make on it, from the investigation of the concentration of economic power, being Government Monograph No. 43, Senate committee print, from the Temporary National Economic Committee, entitled, "The Motion Picture Industry-a Pattern of Control."

Mr. Committee Reporter, I believe this monograph is already a part of the record, is it not?

The COMMITTEE REPORTER. I do not recall it having been introduced. Senator CLARK of Idaho. I think Mr. John T. Flynn offered it. I might state that the cities and towns in which theaters exist are listed, and then, referring to the 2,800 theaters, the writer says this:

While these theaters represent but 16 percent of all theaters in operation—
That is, the writer is referring to the 2,800 theaters-

they take on added significance when it is noted that more than 80 percent of all metropolitan first-run theaters are affiliated-

Let me stop there for your comment either as to the accuracy or inaccuracy of that statement.

Mr. SCHENCK. I cannot very well comment upon that statement, because I am not familiar enough through the country with theaters. I have not done any selling. The head of our department, Mr. Rogers, who is in charge of sales, would be the proper man really to answer that question.

Senator CLARK of Idaho. Let me leave it in this way: If you do not mind, I am going to assume that this Government work is accurate, and when you leave here your men many check this statement, and if there are any inaccuracies in it you will please supply it later.

Mr. SCHENCK. I will be glad to do that.

Senator CLARK of Idaho. In the meantime, I will assume this to be prima facie at least accurate.

Mr. SCHENCK. Well, I do not know about that.

Senator CLARK of Idaho. You have nothing to do with that?

Mr. SCHENCK. That is correct.

Senator CLARK of Idaho. I continue reading from this monograph, No. 43:

In 23 key cities all of the first-run theaters are affiliated (table 3); out of 92 cities with population over 100,000 the majors control exhibition in 73 cities (table 4); in these same 73 cities the majors "operate enough first-run theaters in each to receive a substantial majority of the total film revenue supplied by each of these cities"; there are 283 cities with populations between 25,000 and 100,000, in 200 of which the majors operate one or more theaters; "by control of first-run theaters alone affiliated exhibitors have been able to secure as much as two-thirds of the total theater admissions paid in cities as large as 250,000"; and the affiliates control exhibition in all United States cities with populations of more than 1,000,000."

63855-41-pt. 1- -18

Now, the commentator goes on to say:

More important than the percentage of theaters owned is the seating capacity represented therein, estimated at about 25 percent of the total seating capacity in the United States.

I will not ask you to comment on that now in view of what you have just said. Then it proceeds with some tables and one thing and another.

Mr. SCHENCK. Might I just say a word there?

Senator CLARK of Idaho. Certainly. You may make any comments you have to make.

Mr. SCHENCK. I may be able to help you a little bit while this check-up is being made and which is to be given to you later. It is purely an opinion, however, that I am going to give you. As I understand the situation the so-called Paramount is what you include in the 2,800 theaters, of which they are supposed to have 1,300. As I understand it they control but very few of the 1,300 theaters. They have an interest in a majority of the 1,300 theaters or they would not be considered as a part of the statement you just read. And they really do not control them. Those theaters have men to buy pictures. That has been proven to me so strongly in the last few weeks; I mean, that you have to absolutely sell to each and every one of those theaters, or to the men who represent them. As to a few of the theaters possibly that would not be so; I would not say that is true of all of their 1,300 theaters, that every individual one has a separate partner. They have a number of theaters, like Wilby has so many, and Mr. O'Donnell has so many. But they do not control them. It is a case of individual people who consider themselves, as we mentioned here, partners or whatever it is, in the control of the theaters.

Senator CLARK of Idaho. That is in the case of Paramount?

Mr. SCHENCK. That is correct.

Senator CLARK of Idaho. The most of these theaters are usually called Paramount theaters, are they not?

Mr. SCHENCK. That seems to be a sort of trade way of expressing it. But we find that we have to sell in a different way, that there is no such thing as that when one comes to sell. We have to sell to each individual owner, and they seem to be silent partners.

Senator CLARK of Idaho. Well, we can probably go into that later. I mean as regards Paramount, we can go into it more fully when Mr. Balaban testifies.

Mr. SCHENCK. That is correct. I could only give you an opinion while sitting here.

Senator CLARK of Idaho. So that we may again understand each other and shorten this examination as much as possible, I am going into blind selling and block booking a little bit. I am not going to discuss the merits of that matter with you, however.

Mr. SCHENCK. That is all right.

Senator CLARK of Idaho. That is a matter that is not before this subcommittee, particularly at this time, since the consent decree has modified those practices. But inasmuch as nearly all of the socalled war propaganda pictures were released and exhibited before that part of the consent decree went into effect, I mean covering the change in blind selling and block booking, I want to discuss with

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