Eagle Lion Studios, Inc. v. Loew's Inc.

PETITIONER: Eagle Lion Studios, Inc.; et al.
RESPONDENT: Loew's, Inc.; RKO Theaters, Inc.; et al.
LOCATION: Union Station

DOCKET NO.: 17
DECIDED BY: Warren Court (1958-1962)
LOWER COURT:

CITATION: 358 US 100 (1958)
ARGUED: Nov 10, 1958 / Nov 12, 1958
DECIDED: Nov 24, 1958

Facts of the case

Question

Media for Eagle Lion Studios, Inc. v. Loew's Inc.

Audio Transcription for Oral Argument - November 10, 1958 in Eagle Lion Studios, Inc. v. Loew's Inc.

Audio Transcription for Oral Argument - November 12, 1958 in Eagle Lion Studios, Inc. v. Loew's Inc.

Earl Warren:

-- Incorporated, et al., Petitioners, versus Loew's -- Mr. McGovern, you may continue your argument.

William L. McGovern:

Mr. Chief Justice and members of the Court.

At the close of the argument on Monday, we had observed that the three-judge court in the Paramount case had found that RKO and Loew's circuits in New York had monopolized the first neighborhood run in that city and had divided that market so that there was no competition between them in obtaining pictures for their theaters.

We had also noted that that finding as to New York was not made in installation but rather in the context of the findings as to the overall nationwide monopolization found in the Paramount case.

In other words, the Court in the Paramount case found an interdependency between the respective defendants.

So that you had in a sense a back-scratching situation created.

In other words, RKO and Loew happen to have the theater monopolization in New York.

But Paramount had it in Chicago and Fox had it on the West Coast.

And quite clearly, if RKO and Loew wished to get reciprocal preferential treatment in Chicago and in Los Angeles, they had an obligation in New York where they control the circuit theaters to take care of their co-conspirator defendants.

We had concluded on Monday as the Court may recall by noting that the main issue or one of the main issues in this case was as the Court of Appeals pointed out in the record at page 692, one of the issues set up in the pretrial order was, "Did the defendants combine and conspire in violation of the antitrust laws of the United States to exclude the plaintiffs from the opportunity of licensing on a competitive basis their feature motion pictures to Loew and RKO theaters which exhibit feature motion pictures in the New York Metropolitan area on runs subsequent to first Broadway?"

In other words, the primary and first issue in the case was whether or not the two defendants here had conspired to deny independent distributors like Eagle Lion the opportunity of licensing on a competitive basis their feature motion pictures.

And we ended on Monday by noting as far as the petitions are concerned that in our judgment, there's a fundamental inconsistency between a finding such as you have in the Paramount case that RKO and Loew monopolized the first neighborhood run in New York and a finding that the independent such as ourselves were still free to license our product to those two circuits on a competitive basis.

Now, we suggest further, if the Court please, that any possible doubt about the invidious impact of that kind of a monopolization upon an independent like ourselves is resolved when we stop to consider the manner in which the two monopolist undertook to implement their monopoly power.

In other words, when we stop to consider the mechanics whereby they operated these two circuits.

The fact is that during the four years involved here, the two circuits pursue a playing policy in the administration of their monopoly power that necessarily had the effect of curtailing that market, that tremendously important first neighborhood market in New York.

So that it not only could not accommodate pictures by independents like ourselves, but there wasn't even enough preferential playing time to accommodate the pictures of their own assigned co-conspirators.

Now, that situation resulted from the fact that the two circuits had broken the week down into an arbitrary long half composed of five or six days as they saw fit and a so-called short half composed of one or two days.

The long half, as the Court will appreciate, was really the line share of the long half, five or six days.

They played a double bill on both half, the long half and the short half.

But only the so-called top feature picture on the long half of the week was allowed to earn a percentage of gross rental.

And this was really the only desirable rental position on the entire circuit play.

That top feature on the long half was granted a percentage of gross as its rental.

The second feature on the long half and these two features over on the short half were all paid an arbitrary flat rental which was much less desirable as both courts below found.

So that, you had a situation, if the Court please, where the 100 or more theaters comprising the two circuits plus the 600 theaters in the subsequent runs have played off these two circuits.

All of those theaters were confined to utilizing only 52 pictures in each circuit in that top feature position, on the preferential rental term, only 52 feature pictures per year.

In other words, the two circuits taken together could only consume a 104 pictures per year.

And this during a period of time when their own assigned co-conspiring distributors were producing 250 pictures per year.

Even if you took both of these positions on the -- on the long half, the top feature and the second feature, the flat rental picture, you still only had a 104 pictures there, a 104 pictures on the other circuit, 208 is the total.

And again, during a period of time when the co-conspiring distributors were themselves producing 250 pictures per year.

Now, we suggest that -- that sort of a playing policy tends to make graphically explicit, what we think is perfectly explicit on the face of the Paramount judgement anyway and that is that the circuits did not have enough time to accommodate properly their own codefendants much less have anytime left over for independence like ourselves.