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BASLE THEATRES, INC. v. WARNER BROS. PICTURES DIST

October 27, 1958

BASLE THEATRES, INC., a Pennsylvania corporation, Plaintiff,
v.
WARNER BROS. PICTURES DISTRIBUTING CORPORATION, a New York corporation; Loew's, Incorporated, a Delaware corporation; RKO Radio Pictures, Inc., a Delaware corporation; Twentieth Century-Fox Film Corporation, a New York corporation; Universal Film Exchanges, Inc., a Delaware corporation; United Artists Corporation a Delaware corporation, Defendants



The opinion of the court was delivered by: MCILVAINE

Findings of Fact

1. Plaintiff has been the owner and operator of the drive-in theater at Donaldson's Crossroads, Pennsylvania, since 1950. At the time it commenced to operate the theater, it was known as the Lakeview Drive-In Theatre, but in 1952, its name was changed to the Mt. Lebanon Drive-In Theatre.

 2. The defendants: Warner Bros. Pictures Distributing Corporation (herein sometimes referred to for convenience as Warner); Loew's, Incorporated (herein sometimes referred to for convenience as Loew's); Universal Film Exchanges Inc. (herein sometimes referred to for convenience as Universal); Twentieth Century-Fix Film Corporation (herein sometimes referred to for convenience as Fox); United Artists Corporation (herein sometimes referred to for convenience as United Artists); and RKO Radio Pictures, Inc. (herein sometimes referred to for convenience as RKO) are corporations engaged in the distribution of motion pictures, and all of them except United Artists are either directly or through subsidiary or affiliated corporations engaged in the production of motion pictures. At the time this action was commenced, each of them maintained an office in Pittsburgh, Pennsylvania.

 3. During the period from at least January 1, 1938, to at least January 1, 1950, in the case of RKO; from at least January 1, 1938, to at least March 1, 1953, in the case of Warner; and from at least January 1, 1938, to at least October 1, 1954, in the case of Loew's, the defendants named in this paragraph were directly or through subsidiary or affiliated corporations engaged in the operation of motion picture theaters throughout the United States.

 4. From at least January 1, 1938 to March 1, 1953, a subsidiary of the parent corporation of Warner was engaged in the operation of theaters in Allegheny County and in the Western part of Pennsylvania, including the Stanley and Warner Theatres in downtown Pittsburgh and theaters in McKeesport, Tarentum, New Kensington, and Ambridge.

 5. For at least 17 years prior to October, 1954, Loew's had a proprietary interest in the Penn Theatre in downtown Pittsburgh.

 6. Defendants, and each of them, directly or indirectly engage in interstate commerce, and every branch of the motion picture industry involved in this action is either in or directly affects interstate commerce.

 7. Defendant Fox is a successor and assign of Twentieth Century-Fox Film Corporation, a New York corporation (herein sometimes referred to for convenience as Fox-New York). The statements contained in Paragraphs two and six above are applicable to Fox-New York for the period from at least January 1, 1938, to September 27, 1952. During the period from at least January 1, 1938, to at least January 1, 1952, Fox-New York was directly or through subsidiary corporations engaged in the operations of motion picture theatres throughout the United States.

 8. The principal downtown Pittsburgh theaters are the Penn, Stanley, Fulton, and J. P. Harris. These theaters ordinarily play pictures prior to their showing in any other theater in Allegheny County. The Warner Theatre has, from time to time, operated on a first run policy; that is, playing a number of pictures successively prior to their showing in any other theater in Allegheny County.

 10. At some time prior to 1934, the defendants agreed with each other to establish and maintain a uniform system of releasing pictures for showing in Allegheny County and in towns near Allegheny County. In establishing this uniform system of release, the defendants agreed that they would license those of their pictures which received a first run showing at a downtown theater in Pittsburgh on the following availabilities, and would refrain from licensing such pictures on any earlier availability:

 A. For second run showing in Allegheny County (except for theaters in McKeesport and Tarentum) twenty-eight days after the conclusion of downtown Pittsburgh first run showing.

 B. For showing in theaters located in New Kensington, Tarentum, Ambridge, McKeesport, McDonald, and Aliquippa, fourteen days after the conclusion of downtown Pittsburgh first run showing.

 11. The defendants have continued to adhere to the agreement between them described in Paragraph ten above down to the present time except that in the latter part of May, 1955, Fox commenced to license its pictures for second run showing in Pittsburgh and for showing in McKeesport, New Kensington, Aliquippa, Tarentum, Ambridge, and McDonald and for showing in the remainder of Allegheny County on an availability of twenty-one days after first run showing, downtown Pittsburgh.

 12. Between January 1, 1938, and March 1, 1953, a subsidiary of the parent corporation of defendant Warner operated more theaters playing on an availability of fourteen days after first run Pittsburgh, and more theaters playing on an availability of twenty-eight days after first run Pittsburgh than were operated by any other single exhibitor.

 13. Since March 1, 1953, Warner Theatres, Inc., which prior to that date was a subsidiary of the parent corporation of defendant Warner, has continued to operate more theaters playing on an availability of fourteen and twenty-eight days after first run Pittsburgh than are operated by any other single exhibitor.

 14. The uniform system of releasing pictures, which the defendants agreed to establish and maintain, and which with the exception of defendant Fox, noted above in Paragraph eleven, they have maintained down to this date, has foreclosed competition in at least the following respects:

 (a) Between defendants with respect to length of waiting time between Pittsburgh first run and succeeding runs in Allegheny County and in Ambridge, Aliquippa, and McDonald;

 (b) Between Pittsburgh first run exhibitors and subsequent run exhibitors with respect to length of waiting time between their respective showings; and

 (c) Between subsequent run theaters with respect to how soon after its Pittsburgh first run showing they may exhibit a picture. In addition by establishing and adhering to said uniform system of release, each defendant was assured that no other defendant would offer for license to subsequent run exhibitors in the Pittsburgh area for showing in a particular week any picture which had not been withdrawn from release for the period of time prescribed by said uniform system; the result was that competition between the defendants in licensing their pictures to subsequent run exhibitors in Allegheny County and in New Kensington, Ambridge, Aliquippa, and McDonald has been lessened as the number of pictures available for license in any particular week by subsequent run exhibitors has been controlled by said uniform system.

 15. In fact, however, in 1954, there was a clearance in effect between the distributors and the downtown theaters over the Mt. Lebanon Drive-In, understood and contracted for, as follows: Universal, twenty-eight days; United Artists, forty-two days or more; Loew's, forty-two days or more; RKO, fort-two days or more; Warner, forty-two days or more; Fox, twenty-eight days in 1954, but reduced to twenty-one days in 1955.

 16. The nearest theater to the Mt. Lebanon Drive-In Theatre is the Alhambra in Canonsburg, Pennsylvania. It is 4.3 or 5.4 miles from the Mt. Lebanon Drive-In, depending upon the route taken.

 17. The Alhambra Theatre is licensed by the defendants to play seven days after first run Washington, Pennsylvania, and the defendants often license a first run theater in Washington, Pennsylvania, to play at the same time as the first run showing in the Pittsburgh downtown theaters.

 18. In February, 1954, plaintiff requested each of the defendants to give it the opportunity to license pictures for showing immediately following their exhibition at the Alhambra. This request was uniformly refused by the defendants, and each defendant indicated it was willing to license pictures to the Mt. Lebanon Drive-In for showing only in a playing position under the uniform system of release described in Paragraph ten above. Thus, Universal informed plaintiff it would permit the Mt. Lebanon Drive-In to bid against the South Hills Theatre in Dormont, which is 10.8 miles away, for an exclusive showing on an availability of twenty-eight days after first run Pittsburgh. United Artists notified plaintiff it was willing to permit the Mt. Lebanon Drive-In to play at the same time as the Denis Theatre in Mt. Lebanon, Pennsylvania, which played fourteen days after showing at the South Hills or Hollywood Theatres in Dormont. Loew's notified plaintiff it was willing to permit plaintiff to bid against the Denis Theatre for an exclusive showing as between those two theaters on an availability of fourteen days after the South Hills. And RKO and Warner indicated they were willing to license pictures to the Mt. Lebanon Drive-In after their showing at the Denis. The earliest the Denis ordinarily played pictures was forty-five to forty-nine days after first run Pittsburgh. Fox advised plaintiff in the spring of 1954, that it could license Fox pictures on an availability of twenty-eight days after first run Pittsburgh. In May, 1955, Fox was willing to license its pictures to the Mt. Lebanon Drive-In to play twenty-one days after the Pittsburgh first run showing.

 19. In 1948, or 1949, RKO decided to offer its pictures to the Mt. Lebanon Drive-In to play seven days after the Alhambra. In 1954, however, RKO was no longer willing to grant this availability to plaintiff.

 20. Subsequent to the filing of this action, Loew's decided to offer its pictures to plaintiff for showing on an availability of seven days after Canonsburg, but never placed this decision in operation. N. C. Rosen, Pittsburgh Manager for Fox, was of the opinion in 1956, that the Mt. Lebanon Drive-In should be licensed seven or ...


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