The opinion of the court was delivered by: KIRKPATRICK
1. The Cumberland Holding Company and its wholly owned subsidiary Landis Theatre, both of whom are New Jersey corporations, and which are hereinafter referred to as "exhibitor plaintiffs," own and operate the Landis Theatre in Vineland, New Jersey. The Stock of the Cumberland Holding Company is held and owned by residents and citizens of the community of Vineland.
2. The defendants, Warner Bros. Circuit Management Corporation; Warner Bros. Theatres, Inc., a New Jersey corporation; and Warner Bros. Theatres, Inc., a Delaware corporation, all of whom are wholly owned subsidiaries of the defendant, Warner Bros. Pictures, Inc., and who are hereinafter referred to as "exhibitor defendants," own and operate many theatres in Philadelphia and its vicinity, including the Grand and Globe Theatres in Vineland, New Jersey.
3. The defendants, Warner Bros. Pictures, Inc.; Vitagraph, Inc.; Paramount Pictures, Inc.; RKO Radio Pictures, Inc.; Loew's Inc., Twentieth Centure-Fox Film Corporation; Columbia Pictures Corporation; Universal Film Exchange, Inc.; and United Artists Corporation, hereinafter referred to as "distributor defendants," are engaged in the business of distributing motion pictures.
4. All defendants are engaged in interstate commerce in this district. The distributor defendants maintain branch film exchanges in Philadelphia which serve eastern Pennsylvania, Delaware and southern New Jersey, including Vineland.
5. The major motion picture companies, Warner, Paramount, RKO, Loew and Fox, are engaged in the production, distribution and exhibition of motion pictures; the major motion picture companies, Columbia and Universal, are engaged in the production and distribution of motion pictures; and the remaining major motion picture company, United Artists, is engaged in the distribution of motion pictures made by associated producers, some of whom are owners and holders of its capital stock.
6. Every branch of the motion picture industry involved in this action is either in, or directly affects, interstate commerce.
7. The distributor defendants and their affiliated interests control the production and distribution of approximately 350 feature motion pictures annually or more than 80% of the feature motion pictures available for exhibition in the United States. These include practically all motion pictures of the finer type having the greatest public appeal.
8. No exhibitor can successfully operate a theatre without reasonable access to the product of major producers.
9. At the beginning of 1935 and for several years prior thereto, Vineland had but two theatres, both of which were owned by the exhibitor defendants. They were: the Globe, which was closed, and which had been closed substantially ever since the exhibitor defendants acquired it in 1930; and the Grand, which was open, and which had been open since its acquisition by the defendants at the same time. The Grand was being operated on a full week basis under a policy of changing features four times a week, and therefore exhibited annually some 200 feature pictures. Both these theatres were of antiquated construction, were uncomfortable, unsanitary, and were believed, with good reason, by many persons in the community to be unsafe.
10. In 1935 a number of citizens of Vineland conceived and promoted a plan for the erection of a theatre to be financed by the citizens of the community.
11. Shortly thereafter the persons interested in the new project began inquiring for suitable sites upon which a new theatre might be erected, and the project became generally known in the community.
12. In August 1935, the exhibitor defendants reopened the Globe, and during the 1935-36 season exhibited pictures in it on week-ends only.
13. In August 1936, the exhibitor plaintiffs commenced the erection of the Landis Theatre.
14. Shortly after August 1936, the exhibitor defendants began to renovate and redecorate the Grand. In December 1936, the exhibitor defendants discontinued such renovating and redecorating and began to completely rebuild the Grand. The rebuilt Grand was opened on March 11, 1937, and the Landis was opened March 12, 1937. Both these theatres are modern, fire-proof theatres, offering the usual modern comforts, facilities and conveniences.
15. In September 1936, the exhibitor defendants changed the week-end operating policy of the Globe to a full week basis. The Globe has never been rebuilt, although some renovating was done after notice by the then mayor of Vineland. It was originally constructed in the nickelodeon days by taking out a partition wall between two old stores. It still is an antiquated building, lacking many conveniences and luxuries to which the public is accustomed in modern theatres. It has the appearance of a cheap, second-rate theatre, and, because of its condition, has comparatively little earning power. It has approximately half the seating capacity of the Landis and a little more than half that of the Grand.
16. Since September 1936 the Globe has been operated on a seven-day week for the principal purpose of consuming and delaying product required by Landis.
18. In the later part of 1936; after the construction of the Landis Theatre was begun and before its opening, the license status of the exhibitor defendants was changed. The number of pictures which Warner was obliged to take was increased by 91 pictures and it was provided that the pictures could be exhibited first run at either the Grand or the Globe.
NOTE: The license agreements are somewhat complicated, and the above figures (contended for by the plaintiff) may not be precisely accurate. The defendant contends that the original licenses were for 303 pictures, of which Warner was obliged to exhibit 176, and that the new or modified licenses covered 358 pictures with a minimum commitment of 231, or an increase of pictures which Warner was obliged to take of 57. I have found according to the plaintiff's request, but I do not think the difference is of great importance. The Globe may have been included in the Warner licenses prior to September 1936, when it began to operate on a full week basis, but as a matter of actual practice it was at that time that it began to be operated as a full time, first run theatre.
19. All the distributors except Universal admittedly have refused and will continue to refuse first run licenses similar to those now in effect with the Warner Theatres, to the Landis Theatre, without regard to the price which the Landis may be willing to pay for such first run licenses, provided the distributors can make what their witnesses describe as "satisfactory deals" with the Warner Theatres, Grand and Globe. ...