ddr esritted to
Che Hibr ary of the University of Coronto
bu
Covernme* 3
Do ea” nf
eh'g a ade weit } . a2 ii ‘ oT aS ari ‘ Mey ae « i 1,
Department of Tobe Canadan “, HON. G. D. ROBERTSON . - MINISTER or Lanour —
COMBINES INVESTIGATION ACT
INVESTIGATION INTO.
“AN ALLEGED COMBINE
: IN THE ~
MOTION PICTURE INDUST RY IN CANADA — :
Report: Gr Commissioner : APRIL 30, 1931
er ———— jhe —————————S oS OTTAWA: F. A. ACLAND, Printer to the King’s Most Excellent Majesty, 1931
'Price, 50 cents
tf
Government
Publications
Department of Labour, Canada HON. G. D. ROBERTSON - MunistER oF LaBour
COMBINES INVESTIGATION ACT
INVESTIGATION INTO
AN ALLEGED COMBINE
IN THE
MOTION PICTURE INDUSTRY IN CANADA
Report of Commissioner AR RIE e307 19Sh
EP Ok eS Eee OTTAWA: F. A. ACLAND, Printer to the King’s Most Excellent Majesty, 1931
Digitized by. the Internet Archive in 2022 with. funding from ~ University av’ Toronto
€ 4 Bi © 4 = J L0ie AY
https://archive.org/details/31/6111/658906
Ortawa, June 30, 1931. The Honourable G. D. ROBERTSON, Minister of Labour, Ottawa.
Sir,—On May 2, 1931, I transmitted to you the Interim Report of Mr. Peter White, K.C., Commissioner appointed under the Combines Investigation Act to investigate an alleged combine in the motion picture industry in Canada. In the attached communication, which I have received to-day, Mr. White requests that his Interim Report, dated April 30, 1931, be considered his final report in this matter.
Yours faithfully, BAS, McGREGOR,
Registrar, Combines Investigation Act.
Orrawa, June 29, 1931. F, A. McGrecor, Esq.,
Registrar, Combines Investigation Act, Department of Labour, Ottawa.
Re Motion Picture Investigation
Sir,—Following the transmission of my Interim Report in this matter, a request was made by counsel for Famous Players Canadian Corporation, Lim- ited, that he be given an opportunity to make further representations on behalf of that Corporation. This opportunity has been given, and I now report that im my opinion there is no occasion to make any alterations in the Interim Report as filed with you on April 30. |
I would therefore ask you to consider that report as my final report herein.
| Yours faithfully,
PETER WHITE, Commissioner.
27557—1}
COUNSEL APPEARING AT COMMISSION HEARINGS
Anous C. Hrienineton, K.C. B. H. L. SyYMMEs, for the Dominion Government.
STRACHAN JOHNSTON, K.C. R. H. ParMenter, K.C. for Famous Players Canadian Corporation, Limited.
Je RLS TARR KOO: for Motion Pictures Distributors and Exhibitors of Canada.
G. W. Mason, K.C. F. C. Carrer. for R.K.O. Distributing Corporation of Canada, Limited.
Warner Bros. Pictures, Incorporated. First National Pictures, Incorporated. Canadian Universal Film Company, Limited. United Artists Corporation, Limited. Canadian Educational Films, Limited. Fox Film Corporation, Limited. Tiffany Productions of Canada, Limited.
M. H. Lupwie, K.C. L. ROSENFELD. for Columbia Pictures of Canada, Limited.
G. M. WiLLoucHpsY, for B. and F. Theatres, Limited.
ARTHUR W. Rogsuck, for Mrs. Joshua Smith.
Publications
CONTENTS
Pacr I, INTRopUCTION—DEFINITIONS OF HER Me wheat ny tee OMe Lae eV) ane 9 ets Inn ost y rs Onganization. 2) ir ices fet om Th 12 Pepe OCMCCES ean ar ce hs ante been ctr kag Ls V4 TINE 3 Ae 12 pe PAULUS Ace en eer eS Cte 8 ae SEM lee Ane 8 | 12 iy ELSI 6s 10k aed he ee Rg REN alec 6 ern 13 pba dnenace aim rieulresy 7% oct fkP rote MU Matty 6, OORT A AR 14 it COMPANIES CITED FOR INVESTIGATION............-.2... 04... 0BScee ld. een! 16 1. Famous Players Canadian Corporation? Ltd...) Same aa: ated Cm le 16 evperetmbneatresy Utdiscc ic. ois ed ue aNd eel Mone Ai ee RR a 18 ema ere Henghas td. els dics oa cy ee a A ee 20 PPE UEOMMCURD LEAL Tes TUL .te 2. ieteba slic), We af a eet AE weg Ae MND teat ne 20 papviancheld; Cheatre Company, atd. iv) aa.) ll womens ke blak 21 om mitea “Amusement Corporation, Lids.) paw gil e 21 Gemvinedelhentres TNs toe. ass Mot Re Ee ht ek cae 2a paeemeatre. Holding Corporation) Ltd... ! 00 os Meee eh eee a 23 Umer amioneU hited Theatres itd... 0 eu ee eee 26 Peer uOunt | ubux Corporation... et. eek ee 20
11. Other Producers and Distributors:—Canadian Educational Films... Utds
Canadian Universal Film Company, Ltd.; Famous-Lasky Film Service, Ltd.; First National Pictures, Inc.; Fox Film Corporation, Ltd.; R. K. O. Distributing Corporation of Canada, Ltd.; Columbia Pictures of Canada, Ltd.; Regal Films, Ltd.; United Artists Corporation, Ltd.; Warner
Brogiers,rictures,inc;) Vitaeraph, Lic...) ee te eee 27 12. Motion Picture Distributors and Exhibitors of Canada.................... 28 IV. Famous Piayers’ AcquisITIONS oF THEATRE INTERESTS...................... 3 Cy MOTT OIIO, NOR 2 herds nin Hide AS Sek Lic a ae sg eect AM aly Re Lit le a 36 (sp) British Columbia— iba GC ubdramouns Cheatres: ltdi...42 2226224. ee cee ee 37 Zo VANCOUVER (OLTaHd))s-¢verchied ns 11, I eS ae 42 3. Langer Chain (Vancouver)................-. Rd 2A, Peon A Tee Ret 43 A VeV ANCOUVEEM(MTAGER)) sty.0tito kos) shay tek el ene ee ifs 44 SS Newey EStMINSter. ici 42s dahaes £25 ba la hae ad ee eR oe 44 Grp Bermy nO Nati. hy /hiya dda ret hens) within toh terme ene Wi Mtge MaeA SPAS: 45 PRECOSS IG TICL en OD asta gti id he ty CR nhs gO a eee al 4, Lg 46 Sa Vancouvern(Orpneum)..cci sas aca ce (2a 2s bets mone Oe a ee 46 (c) Ontario— BREE CIL CHE TOT A, Sian nd ote! Sorts wh ede) ste cas eS oe ars ee ee , 46 DPV A TINEA OMe eae eet Rye cece tenet see eer No tote eres ir he en a AE 47 De CLERDOLOUG Oe sata aes SONG ot ae hee ee OE a een eae a 49 4. Chatham, St. Catharines, Woodstock, Trenton...................... 50 Dae OTA UL ONG nails ee Oi ne sats hosts vue eRe ru oe Coen ara hae 51 ais CH DTEN G0] 6 ect Tere ea neat eM, ne Ca aang an A Nar eR Cod age 52 TAOBOTECATE DUT Ficlets Cae CNY 53 SAE OLE WW ULUAT IRs © is, eat al elise eee te ene ie COME ll: bau MMe ha 2 akties 53 AS rh Ge Wk ape ta neck Sat DR EMP RO Aaa eee a TCD AA CAIRN nee. SiR an CS ROMER 53 10. Acquisition of Allen Theatres, 1923:—Toronto, Kingston, St.Catharines, Cobourg, Stratford, Paris, Ottawa, Winnipeg, Edmonton, Montreal, Galgary, MoosevJaw, Brandon} Reginawiiec~ los. Agee wk oO dk 54 TAPES TOD STOLE ees KOM ic ol ce testi AY eae oe, ata eis ota shh ee eT ee eS ret cee 55 TOE OTeLON pater, eRe hg Ne oar aula hg Wh eeu ar cn aha Ed eA ee Bees 55 K
6
CONTEN TS—Continued IV.—Famous Puayers’ ACQUISITIONS OF THEATRE INTERESTS—Concluded (c) Ontario—Concluded PAGE 13. Obtawas 50... 0. 6 Soph HIM Ra do le os nite tare tale 55 14. Cobourg. 05.0 ce ee oe BASS Wee eens cae eae een 56 15. Parvis@ci cc bec 6 oa Sed aoe Ca es Sg Sk eee cca aa eer ee 56 16: Welland? cick A. fee A PETS Se 56 17. Owen Sound... so. cows 0a Sea eee eae ce ae en ao 56 18. Sarnia =. esc oa eas oe sale dela bls Ghia s ere Bits Se Aes A 57 19.:Cormwalks 2 eens Se he aies cee eee os eon ely peelg pia buele © Go» 57 90, Stratford. . occ. cu cc's bik sw se 6 wd wis BW alata a he ote erent en 58 21. Windsor, Walkerville. .:.. 2 0.50. c6 uns + oie 0) as eee 58 99: Belleville: iach ies aces nie view 0 Oe caw sce bs Deb scual ke aa 58 23. Broek-waille@w..-.<. 5. cc ce oc 5 sien cnet tbl hd Ae 59 24. Sault Ste. Marie......2%.2. 08 leaned le ee 59 25. SUGDULY occ sg bie we ee we oie See ee oe ctr 59 26. Port Hope... 065 2. nies co ees oye 0 oe 2 oe De een 59 27. North Bay... 5s 5ee ve Bae oe woe be eet, rr 59
28. Acquisition of Allen Theatres, 1928:—Cobalt, Haileybury, Leamington, Preston, Toronto, Weston, Wallaceburg-Mount Dennis, New Toronto,
Port Colborne, Smith’s Falls; Toronto. >.<, 3. — eee eee 60 29. Famous Players’ Toronto: Pheatres. .: «, .. +... 24+. eee 61 30, B. & F. Theatres, Limited, Toronto ...... 2. var eee 68 Evidence of Ben Freedman and R. J. Bruce .....2.........-«-«-- rel 5 WSs James sn... «us 54a) dm bie te call a 74 Bert Wainwright «3.5.5: se 4a eee ries 31. Other Famous Players’ ‘Theatres in: Torontocso/..25 ag. oes ee 79 32. Summary of ‘foronto ‘Theatres! :.... °°: ee 80 33. Summary of Ontario Theatres: .....0<.<..40 ee ao eee 82 (D) Quebec— 1. Montreal. oo... tee gk lbh Go ees + 4 ewe tee ee ee 83, 84 2. United Amusement Corporation, Ltd., Chain:—Montreal, Verdun, Lachine, Sherbrooke.').. 2.0.3. i.20.-<.2+..4 see 84 3.. Three Rivers i... 4) s vk snes vss ee ade pele 85 4, Quebee City cite i sca ae ie acta eels 85 5. Quebec Province Summary... .../). >... (Hepes ee ee 85 (gE) Maritime Provinces— L. Halifax. . 2. sees eae bab es ne 86 2. BSYONCYs of. nie ee ds ce aes cde ecu ssa sss oe 87 3: Baint JOHN. . 06... ns case veh wees elec ste cee 88 (fF) Manitoba— : 1. Winnipeg... 2.624.005 230 ea es ee ee 88 2,, DEAHAOM. 34 eee yee ele ee ele 2b a aw gece SOR ee 90 (a) Saskatchewan— I. Saskatoon . 0.056.202. sae va ees a ivne vc ee 90 2. RePiNg 60... d's dan eau 4 pees Coe kl ee 91 3. Moose Jaw... cs Jisry = auc pabe cols «sco cde Lave eee oe 92 46 SHAUNA VOD) iid Sey 05d» 3bUa os acne oe A 92 D:* Weyburn 22s). 255 evn aa Sack Sigh EES 5 ag 92 6. North Battleford. 00.50. 08). 2 eae cee ce Oh ee 93 (x) Alberta— 1. Hdmonton. 22s cis cals Patians vee tole | oe ake ee . 93 2s, Calgary, 30 + niccin.cf 5 cleiel ee oulie scleae dene eke ee 94 1B. Lethbridge . os icep side auras 44s de ae eae shee Re ata ae 97
(1) Rk. K. 0. Chain:—Calgary, Montreal, Ottawa, St. John, Vartcouver, Winnipeg 97 (1) Closed Theatres
oie emailer wos mle are 9 ae aha Me ela oy) Une cy rr 100 (K) Dheatre Bites oo ood saw ogi Lis el ee Oe ee 100 (Lu) Summary for-Conada.'.\.'s..5.,,. ed oe ee, eee 101
7 CONTEN TS—Continued
PAGE Vy Famous PLAYERS AND THR EXCHANGES. ..0... 006006 ooe coe e ce cccecncececcne, 107 Pemeancus lasky Pitm Service, Ltd en! SS Zora. AG arr rere 107 pemecar ims Tide. ase cee ee cs fh eee, a iO a ot 109 3. R. K. O. Distributing Corporation of Canada, Dian rect en ee ree 114 Pope ras iat Corporation «hades ce oor eee ee, 1d CL SUEY ae Nal thee Brel? 5) seed gan a nm RnR ore eee. 5) UNE OR 9 a 121 ereonadian, Hducational Wilms, Ltd) ic... /05. ee eee. 124 7. Canadian Universal Film Comupany, Iitde ts oo. hn 07 Meee. ene eee ae 124 Say Uited parishes Corporation; Ltd... 00.6 ov oS ek ote Poe ne oon cence vb dha 126 pa colum ise iemites of Canada, Titd. ..«. . ... neces aireatnc cco 5 cca lado’ 2c fOS et mone eroomctiions of Canada, Lid. ..\..,.. 21-2 eadtisens deca cadeaneck #0: 127 AO ee, sed Waid a: akd os 2 skstyrn th ot COO oui ebe le 128 1. Reasons advanced for and against Protection...............ccccececcccees 128 2. Protection demanded by Famous Players......../c.eec.ccccccleccccccccs 130 a upnuons of Colonel Cooper and others... 00/4000. a Bes) eR. 137 4, Concurrence of exchanges in demands of Famous Players.................. 139 Canadian Universal’ Film. Company, Lid)... ers ebb. 4. 139 Coluinbia Pietures of Canada,: Lid... 02. 00. sso Seen A ee 139 Bamous Basky. ilm:- Service, Ltd... cco RR One, 140 feb: OnbPictures Corporation of Canada, Lid: rs.ys3¥. os Yeeeah 140 Pesetson Corporation, Lids... SM ae i ee, Bee 140 Pee eH ais ECE eo. oagWs Neato dane so ROR PR OR, ae 141 Rod, Os Distributing Corporation. (Canada) btdiuna!. i age hee 141 Pminedvariicta Gomoration. Utd... A Wio is chat cars sw teeta ae eae ra 141 Warner Brothers Pictures, Inc., First National Pictures, Inc., and
RE LE TERME Re lees) thesia Ek es o Mie iedd bala OLE Mee cela SiMe te 142
5. Protection accorded Famous Players’ Theatre, Smiths Falls, against Perth Pi Se iY emer SYS fan ke AS OP ne erent ore, 1p Ieee See Scie eg meena alts eae 143 Gumi ae Tera rome: PTOLCCHIONs s . ches ket hoe ns Demat ae tea eat 137, 1388, 144 Sie oretet ook tea AND GLIND HOOKING: 0.0 5.5). shakes bole: Te A eae ee eee 146 teple DIC CMEETOl, NOatia adie’: t OFOUEO <5 2 is.5.5: uses bs wed eos cs nah Wb Oe ae bide 147 2. J; A DOV, TOrantoia: «7.5 Anand SAR ee ls eee ae 147 3 “ eee olan Ottawa se orc cho panes AE URS Sakae iia eae 147 4 ms Piyrran Kane T Orn mitas' 2 ai. e fac dina sahae «8 ee gee 148 5. re Abraham: Polokote Voronto:... «+ saa +20 esas arenes tale eee 149 6. Parvy. Lester, | OFOULO: : 2. a6 > © ca Dee 2 eee Bee eee 149 a PSs Stapleton pO GtA WA. << ca 2s 3 deh om oi. 0 2 ere 150 8 . HOMIES: VWealtOnye OROnTOKG.et | .4GseRe OS ae. Sees 150 9 « He PaRedway;iloronto.: 03 fo. et cee eo ee eee 151 10 % Wiis. Brady? bOrango. » «5% fe). nc Pe a's re a ea ee 15i it a Harry Alexander); Toronto. . 25.0.5 (ne ies 45 oo. ee eee 152 12 s Much GsDonnell Perth; {0.058 at Sa ae eee =~ Oe ee ene 152 13 - Frederick Guest; Hamilton, Dundas, Vancouver............--- 153 14, Hy Ho. M.Anderson, North: Bays: 2d catentics + ie - eae es 153 15. os Mirae Joshua Suuth, orontGl ins i. ie arta ts Je ec en) tae 154 16. ‘ Haskell Masters, United Artists Corporation, Ltd.............. 154 We i Clair Hague, Canadian Universal Film Company, Ltd... ...... 155 18. ce Percy Taylor, R. K. O. Distributing Corporation, Ltd.......... 155 19. « #., S. Ravell, British International Pictures, Ltd.............-- 156 20. Findings regarding Block Booking and Blind Booking...........-.+.+++++: 157
RETe. Peer PES PIGMOW, «oo .8 poh cew some Se eae vt a Rie avi Cine © Hehe vinahe’ Sy > Ren Se wages 158
8
CONTEN TS—Concluded PAGE IX. Acrivities or Motion Picture DistRiBuTORS AND EXHIBITORS OF CANADA.... 162 1. Organization and Purposes. ...2...-......2...2% 02) ate} - ep ee 162 2. Activities:in 1925... 26.5,4.4:7..win bn Sh.e sa leer eae tr ee ee 164 3 e: 1926 oo sn Hon ee cb ne te ae ab ead ve nee eee 169 4 H 1927 is oo eS RE ey ee 174 a 1928 02 nev vonckgd ye wie os BORE SSPE fae ee 178 6 ¥ 190900. ooo eels Eat eae pend bo ee. tie 183 7 “t 1980 050 oo ok es oko cele Se halt pais Cape Tier 186 X, Sranpinp ExHreirron ‘CONTRACT oo Oyo ae a 189 1. Inceptionand révisionsey ea oe ae eo 189 2. Prices and payment on percentage basis. .......:.4. 4... 07a eee 191 3. Protection ig chee sc cbescs w legs oon bo ee ye os eos vk 192 4. Delivery and return of. prints!)i.4: 507 4.0 208-10) Ae ee es 192 5. Assionment, of contract...)...... 1420980 b 42.4080) Jee Vee 193 6., Selection Of dates .....0! secs oso AE Pe eke) 193 7.. Minimum admission ‘charge... 4. $. foc. 0.40.46 ook Se ee ee eee 194 8.. Advertising ACCESSOTIES,. 2: -.j.42 0h. Mai ae sn) Po ke cay ee 194 9.. Delay in (performance... .4.4</...\scnn 4 veare iene bles oh. 2 ee ee 194 10.. Acceptance of application , .4:50(: 2cske 9). | ¢ 5 2 ete a 196 11., Arbitration: . ..é2he dik. Bb RAGE $6 10 Se 196 1D, B..Stapleton’s case, Ottawa, ........ 0.2 <7 5 4 «ree ee 200 B. Mechanic’s case, Windsor. «,....5..0.- cls os oo ee ee eee 202 12.. Arbitration: in Great Britaim:s// 52). fc oes A Ye eee 204 XI. Crepit Committers Ruies or Firm Boarps or TRADE....................... 206 1, Statement. of Rules... 3... 6.64. ohc5 ei vue). ste oer 206 2. rederick Guest's case; Vancouver. ..ccmes «+. 2 am aye ee 208 3. Fox Film Corporation correspondence /,.....5.. + 250-5 209 4. Findings regarding Credit Committee Rules. ....... 4 Geese eee ee 210
XII. CoopER ORGANIZATION—ACTIVITIES IN CONNECTION WITH SOCIAL ORGANIZATIONS 211
XLT, LavRmnte’s Casa; TRAm, BiG. ose ae) 2 oe 213 XIV. Stock, ConTRou. OF: FAMOUS PLAYERS ...<.. hSEIULK, 2272 eee 223 XV. ARGUMENT. AND FINDINGS. 0 o0-24.)0.55 90-4 eho te ee 224
XVI. GENERAL "CONCLUSIONS (3). at ee) a BS ey yee _ 230 Parties to the Combines: 2.20 2.00000 25000, 233
APPENDIX—OUTLINE Map or City or TORONTO, SHOWING THEATRE ZONES AND LOCATIONS OF THEATRES.
REPORT OF COMMISSIONER
Toronto, April 30, 1931.
F. A. McGrecor, Esq., Registrar, Combines Investigation Act,
Sir,—Having been appointed, by Order-in-Council dated September 23, 1930, a Commissioner under the Combines Investigation Act to make an investi- gation into an alleged combine in the motion picture industry in Canada, and having undertaken the burden of such, I now beg leave to report the result of
Department of Labour, Ottawa, Ontario.
my investigation.
The industry has to such an extent developed a vocabulary peculiar to itself that for the sake of clarity of expression it appears advisable to define These definitions are intended to convey the meanings in which the terms are used in this report rather than to define them exhaustively
certain of the terms.
I. DEFINITIONS OF TERMS
or with perfect accuracy.
I
2.
ise)
Producer.—The person making a motion picture up to and including the negative print. |
Distributor—An agency in Canada “ selling’ to the Exhibitors the right to show motion pictures. Each Distributor has 6 branch agencies or local exchanges, one in each “ Key ” City.
. Exchange—The local office of a Distributor in a “ Key” City. _ Exhibitor —An owner or operator of a theatre where motion pictures
are shown for expected profit.
_ Film Board of Trade—An organization of Distributors in each
“Key” City.
_ Commitment—A pre-season contract between the Exhibitor and
the Distributor for the right to one or more pictures to be played during the next “season” at one or more theatres on dates to be determined. |
. Booking. —The act of writing into the contract the dates upon which a
picture is to be “ played” at an individual theatre.
The term “ Booking ” is also applied so as to include both booking and commitment. The context will determine the sense in which the term is used.
_ Block Booking—-A contract for a group of pictures offered as a
whole. The number of films in a block or group is not uniform.
. Spot Booking—The making of a contract for a picture, the positive
print of which is to be delivered and used in the individual theatre in the immediate future. f
10. Blind Booking—The making of a contract for a picture or a
number of pictures which have not been produced and which consequently cannot be screened and seen before purchase.
9g
ot
12:
13.
14.
15.
16.
Neg
13,
29.
24.
20. 26. 27. 28.
29.
10
Negative Print—The first print on film and from which the positive prints are made.
Positive Print-—The print on film. which is actually used in the machine for the production of the picture on the screen—some- times spoken of as a film. The film now also carries the “track” from which the sound is reproduced. If not, a “disc” is used for the sound reproduction.
Zone.—An area or portion of a city or town, the limits of which are usually determined so as to include theatres directly com- peting against each other. |
Run—tThe period for which a picture is shown in a theatre—some- times spoken of as a contract. |
First Run—The first showing of a picture in any city, town or zone.
Down-town First Run—A first run in a down-town theatre, usually one of the principal theatres in the city or town. The expres- sion is usually applied to the first showings in the larger cities.
First Run in the Zone-—wWhere the city or town is divided into Zones, the expression applies to the first run in a Zone after the first run in a down-town Zone.
Second Run—The next showing of a picture after the first run. This applies either to the first run in a Zone, if after a down-town first run; or the second run mm a Zone, that is the next showing after the first run in a particular Zone.
. Subsequent Run.—All showings after a first run—which may be
a second, third, fourth, fifth or sixth run.
. Long Run.—A run of two weeks or more. . Protection—The withholding of a picture from a second or subse-
quent run for a period of time after the close of a first or pre- vious run.
. Clearance or Protection Period—The number of days. elapsing
between a first and second run or between a previous and a next succeeding Subsequent Run.
Standard Exhibition Contract—A contract between a Distributor and an Exhibitor for the exhibition of a picture on the Standard form.
Key Citries——The cities in Canada where there are local exchanges. These cities are:
1. Toronto 4, Winnipeg 2. Montreal Qo. Calgary 3. Halifax 6. Vancouver
Feature Picture -—A picture of four reels or more. Short Subject—A picture of less than four reels. News Reel—aA picture depicting current news, usually of one reel.
Road Show.—A special feature picture shown at a special admission price and usually on special terms. Also—A legitimate stage performance where the company goes on tour.
Sound on Film.—A film where the sound reproduction device is part of the film, the part being called a “ track ”.
30.
jl.
32.
33.
34.
30:
36.
Oo”.
38.
39.
40.
Al.
11
Dise Machine—A projecting machine, of which the sound repro- ducing device Is a disc resembling a phonograph record and which is synchronized with the film or print.
Pooling Agreement.—An agreement by which the receipts and ex- penses of two or more theatres are pooled and profits or losses divided between the parties to the agreement,
Operating Agreement—An agreement providing for the operation of a theatre on a profit and loss sharing basis.
Booking Agreement.—An agreement by which one person does the contracting for and/or the booking of pictures for a theatre not necessarily operated by him.
Flop.—a picture which fails to attract patronage and consequently fails to produce expected box office receipts.
Independent Theatre—Spoken of as one in which Famous Players Canadian Corporation, Limited, has no direct or indirect financial interest.
Closed Town.—A city or town where the only theatre or theatres are operated by Famous Players or a subsidiary or affiliation of Famous Players.
Season.—The motion picture exhibiting season extends roughly from the Ist of September to the succeeding 31st of August in each year.
Release —When a picture is ready to be exhibited and the positive prints are ready for screening and distribution, the picture is said to be reicased. The noun has a corresponding meaning.
Score Charge.—A charge for the use of the sound part of the film —sometimes spoken of as a synchromzation charge. These are referred to also as “sound terms”.
Bont.
(a) The division of the pictures of one producer between two or more exhibitors in a city, town or zone. a text (b) The division of the gross receipts in excess of certain specified
amounts.
A “Split Town” is one in which there is a split as in (a) above.
Person.—Includes, where the context requires or permits, an in- dividual, a partnership and/or a corporation.
Il. THE INDUSTRY—ITS ORGANIZATION
The Motion Picture Industry has three principal branches:
(a) The Producer. (b) The Distributor. (c) The Exhibitor. 1. PRODUCERS
The number of pictures produced in Canada has been of such minor importance that except as specifically mentioned it may be disregarded. The bulk of the pictures exhibited in this country are produced in the United States. 73 pictures of British origin were released in Canada during the release year or season of 1928-9, and the year 1930. The total number of all feature pictures released in Canada in the release year 1928-9 was 548, and in 1929-30, 401. (Exhibit 282). This means that of the total number of pictures released only 7-69 per cent were British.
The principal United States producers releasing pictures In Canada are:
(1) Paramount Publix Corporation (successors to Famous Lasky Cor-
poration).
(2) First National Pictures Incorporated.
(3) Warner Bros. Pictures Incorporated.
(4) Universal Pictures Corporation.
(5) United Artists Corporation.
(6) Sono-Art Productions Incorporated.
(7) Educational Films Incorporated.
(8) Columbia Pictures Corporation.
(9) Pathe Pictures Incorporated.
(10) Radio-Keith-Orpheum Corporation.
Note.—These two have recently merged under the name “R. K. O. Pathe Pictures Incorporated”. (11) Metro-Goldwyn-Mayer Pictures Incorporated. (12) Tiffany Productions Incorporated.
The principal British producers whose pictures have been exhibited in Canada are:
(1) Gaumont British Corporation Limited.
(2) Gainsborough Productions Limited.
(3) Rritish International Pictures Limited.
2. DISTRIBUTORS The principal distributors of films in Canada are:
(1) Famous Lasky Film Service Limited
This company distributes the pictures produced by Paramount Publix Corporation, referred to as Paramount Pictures. 100 per cent control of this company 1s in Canadian Paramount Corporation, Limited, seven-eighths of the shares of which are owned by Paramount Publix Corporation. (Evidence pp. 34-40 and 1060). Canadian Paramount was intended originally to be both a distributor and an exhibitor, but-on its formation Famous Players took over all Canadian Paramount’s interests except in the distributing companies. Since this, Canadian Paramount has been engaged only in distribution through its two 100 per cent owned subsidiaries, Famous Lasky Film Service Limited and Regal Films, Limited.
12
13
(2) Regal Films, Limited
This company distributes the productions of Metro-Goldwyn-Mayer Pic- tures Inc. and Pathe, also those of British International Films Limited. It is also controlled by Canadian Paramount Corporation Limited by 100 per cent
share ownership and thus indirectly controlled by Paramount Publix Cor- poration.
(3) R.K.O. Distributing Corporation of Canada, Limited
This company distributes the productions of Radio-Keith-Orpheum Cor- poration. Recently, however, a new corporation has been formed in the United States under the name of R.K.O. Pathe Distributing Corporation, which looks like a merger of the R.K.O. and Pathe interests. Regal Films, Limited, however, continue to distribute Pathe pictures.
(4) Fox Film Corporation, Limited This company distributes the pictures produced by Fox Film Corporation. (5) Vitagraph Limited.
_ This company distributes in Canada the productions of First National Pictures Incorporated and Warner Bros. Pictures Inc. and Vitagraph Inc.
(6) Canadian Educational Films Limited.
This company distributes in Canada the productions of Educational Films Incorporated, and of Sono-Art Productions Incorporated under the name “Sono- Art-Worldwide.”
(7) Canadian Universal Film Co. Limited. This company distributes the productions of Universal Pictures Corporation.
(8) Umted Artists Corporation, Limited.
This company distributes in Canada the productions of United Artists Corporation.
(9) Columbia Pictures of Canada, Limited.
This company distributes in Canada the productions of Columbia Pictures Corporation.
(10) Tiffany Prades of Canada, Limited.
This company occupies an office with Canadian Universal Film Co. Limited, and the physical distribution of the pictures sold by it is made by the Universal Company. It distributes the productions of Tiffany Productions, Incorporated.
This distributor also, through the Universal Company, distributes for Gaumont British Productions of Canada, Limited, which distributes the pro- ductions of Gaumont British Corporation Limited and Gainsborough Produc- tions, Limited.
There are a few smaller exchanges, such as the Excellent Film Exchange, which sell short subjects produced by independent producers in the United States.
3. EXHIBITORS
There are 1,108 motion picture theatres in Canada, of which 809 are owned and operated as units by single owners, and 299 by owners or operators of three or more theatres. Of the 299 theatres, 207 are either owned or operated by Famous Players Canadian Corporation, Limited (hereinafter in this report referred to as “Famous Players”) or its subsidiaries, or companies in which it is interested, or under operating agreements or pooling agreements. Famous Players with its affiliations is the only exhibitor operating any great number of theatres. Famous Players contract for and book pictures for nearly all of
14
these 207 theatres, the principal exceptions being the Dewees, the Allen, the “B & F” and the Markell affiliations. }
There is no effective organization of independent theatre owners and each exhibitor contracts individually for his own theatre. Recently, however, an organization known as Exhibitors’ Co-operative of Canada, Limited, has been formed, with a membership operating about 31 theatres, which does some col- lective bargaining for pictures, but in a comparatively small way.
For purposes of distribution Canada is divided into six territories, each served from one of the Key Cities mentioned in definition 24.
The situation in each of these territories may be summarized as follows:
SINGLE OWNERS
Territory Served from Theatres Te (ORTaTIO fe Wek els BY ce) OUR) oS so OL OTSOTICO. sacha tive eit ra oe 258 2. Quebeeli. wis sac) sbcgtrietet. So Montreal.: o5 7) (cei olen 146 3. Wintiperss ... oa seuss wee eee es WWENMIDC gs. 55. ee 124 4) Calgary fe. a0” wel escuele cee ety ee ee COISAT Ys. ts 2 ao 144 5. ‘British Columbia... f.) 20 weve bes VONCOUVCL:. 02. se ee ee 4] §. Maritimes oclevripealli@e Gah cet Bealifa xi SAR cree ee 96 809 OWNERS OF THREE OR MORE THEATRES Theatres
LAOntarrOR A. 50) 6) EEL, a do ec? cE Rae te macro 117
2s MIT EDER Lacia « hire Hel loved CRSP ON a Gil Bie bse ooelte lak etottlede: ah eae een wae 53
BS Meare Gime ne is 3. ish Oca a ere ere is at tales So coe niche. tele hte con 24
4) British Colm bias. igs fc sees fell <a tei) Cate bene ete sie aan ete 30:
Baleares ie cae heel see) dakar rarle ds Muchas Vette totais (allie toll iat aemanene 30 6. Wainnipedis|) se wie) ieiiliis co sie cote) seh Meta ire ahs ott ltt een so Oe 45 299 Grand Total coe Se ee beets rele) Wsee see! ele oo 16 re pall agt eS eee
4. PuRCHASE OF PICTURES
The producers in advance of the season announce through their respective distributors the number of pictures that each proposes to release during the approaching season, with the names of the stars, usually the title (this is some- times changed), and certain particulars describing to some extent each picture.
For the current season of 1930-31, the producers propose to release feature pictures as follows:
Paramount Publix. sa: fs ley lew dinstetsaryo picts Deke yay DRRSE EE eee Metro<coldwyn-Mayet.:. 5s apes we oe one ht 6 es Be Eee 52 BOGUS bo PA Rae RS A ms! NEESER ARR a ORS 48 Warner! Brows. eyiws. \. 1a eu 2. Sk. (RBIS aR eee 35 Hirst National, «tic ods < 2.deipeek © elec’ Oa see eee 35 Pathe). 0 thie? aGtt Seek, Ree TS TEN Bie eee 20: TUR AIY,. a. cdi -otel Morais eee ete SI mae ce lewis Ba ee ct 48 Columbiag sid. ots. settee: aes) «lates seinen od ee ieee 20 Linited “Artistes y.0 5 Oi cn cheree eek a eee ecu lace hc rel tee or eaten 19 Universal 27 Su) oT IQS VG. Tt eC, 2 See ee 20 Sono-Art-Worldwide.. «s Gh.ciai Skee eek ee ee eee 7 Gaumont. British: «6.65 « snd nels tebe, ue ee 20 British -International...... 3... See eee. ee ee, 4 eee 20
Totaly AU dH tie ia RE ATR ETECS, ERP TOT Che ER a 462
Famous Players deal with the head offices in New York of most of the producers or with an executive officer from New York who comes to Toronto for the purpose. Other exhibitors deal with either the manager for Canada of the distributor or one of the branch managers, or a salesman. Each distributor company maintains a force of travelling salesmen, and in practically all cases
the exhibitor signs a contract which has no effect until approved by the head office in New York.
15
Most distributors endeavour to make commitments with the exhibitors for the whole number of pictures to be released by the distributor or a “ block ” of such pictures. Some distributors instead of making a commitment require the exhibitor to sign a separate Standard Exhibition Contract for each picture at the time the bargain is made, whether such bargain is for a “block” or a single picture.
An example of a commitment appears in Exhibit 97, being between Famous Players and Fox, for blocks of pictures to be shown in each theatre named in the schedule and to be released by Fox during the season 1930-31. It is to be observed that of the 48 pictures expected to be released, Famous Players is to have first choice as each is released, and is to play in each theatre during the season the minimum number of pictures set opposite the name of each theatre in the schedule, being from 15 to 40 pictures.
United Artists, owing to the fact that that corporation is the selling organi- zation for its members, who are artists of note producing their pictures individually, sells the pictures of each artist separately from the pictures pro- duced by or for the other artist members.
It frequently happens that the number of pictures expected to be released by the individual producer is reduced by censorship or alteration of the producer’s plans, and it sometimes happens that a picture not in contemplation at the time of the pre-season arrangement is substituted for one the production of which has been contemplated.
Most of the commitments and/or contracts made by Famous Players pro- vide for the paying for the pictures (as exemplified by Exhibit 97) on the basis of a percentage of gross receipts, the exceptions being those houses where vaudeville is played. The pictures shown in these houses are paid for by a “flat rental” or fixed sum for the run.
It is a fair conclusion from the evidence that while there may be a certain amount of bargaining between Famous Players and the distributors, the per- centages and flat rentals paid by Famous Players are fixed by them, and the distributors, if they would deal with Famous Players, must accept Famous Players’ terms. This subject will be dealt with more in detail later.
Ill. COMPANIES CITED FOR INVESTIGATION 1. Famous Puayers CANADIAN CorporaTION, LIMITED
This company was incorporated by letters patent (Exhibit 1) issued under the Dominion Companies Act and dated January 23, 1920. The authorized capital was $15,000,000 divided into 150,000 shares of the par value of $100 each—65,000 of which were first preference cumulative, 10,000 of which were second preference, and the remaining 75,000 were common shares. All had equal voting rights.
Supplementary letters patent (Exhibit 2) were issued on March 30, 1928, confirming two by-laws passed on March 29, 1928, decreasing the capital stock from $15,000,000 to $12,700,900 by the cancellation of 22,991 unissued first preference shares; changing the common shares to shares without par value and increasing the number of common no par shares to 600,000. The preference shares have been redeemed. ‘The authorized capital therefore now consists of 600,000 no par common shares, and of these there had been issued, as of August 30, 1930, 378,660 shares. Of these issued shares, approximately 189,300 are held by the Montreal Trust Company under a pooling agreement dated March 7, 1929 (Exhibit 115). Of these, Paramount Famous Lasky Corporation, the pre- decessor of Paramount Publix, contributed 165,375 shares and N. L. Nathanson about 24,000. é
Voting trust certificates or certificates of beneficial ownership were issued in respect to these pooled shares and sold to the public by Royal Securities Corporation, Limited. These were rather widely held. Subsequently, in April, 1930, an offer (see Exhibit 300) was made by Paramount Publix Corporation to exchange four shares of Paramount Publix for five shares of Famous Players. A large number of shareholders and of the holders of voting trust certificates accepted this offer, so that as of August 30, 1930, Paramount Publix were the holders of 355,131 shares of which 174,766 represented share certificates and 180,375 represented voting trust certificates, out of the total issue of 378,660 shares, or 93-786 per cent of the total issued shares. Under the agreement Nathan L. Nathanson, then General Manager of Famous Players, Isaak Walton Killam, President of Royal Securities Corporation, and Adolph Zukor, President of Para- mount Publix Corporation, are the Voting Trustees. _ The ostensible object of the pooling of the shares was to’give the public the impression that Famous Players was a Canadian controlled company inasmuch as two of the Voting Trustees were Canadians and the pool had share control of the Company. See Exhibit 323, a circular issued by Greenshields & Co., which states:
“Control of the Company is being assured to Canada through the purchase of common stock previcusly held by American interests. For the purpose of retaining this control and providing continuity of the present successful manage- ment, voting control has been placed for a period of ten years in the hands of three trustees under a deposit agreement in favour of the Montreal Trust Company.” This circular was issued to the public as an inducement to buy shares which had been purchased from Paramount Famous Lasky Corporation by Royal Securi- ties Corporation, Limited, and which were pooled. The purchasers were to receive Voting Trust Certificates, the definitive certificates being held by the Trust Company. _(See also evidence of I. W. Killam, pp. 6859-6860).
The real object of the voting trust was to protect Mr. Zukor and his
company in respect to a franchise agreement which gave Famous Players an
16
sy
option in the Canadian market on all pictures produced by the United States company. (See Mr. Killam’s evidence, pp. 6861 and 6884-6887) .
This franchise agreement, which T. J. Bragg, the present Secretary-Treasurer of Famous Players (Evidence, p. 20) states “is probably the most valuable asset acquired by Famous Players Canadian Corporation, Limited at its organization”, and in respect to which Arthur Cohen, the present General Manager of Famous Players (Evidence, p. 20) states, “That is the most valuable of all the assets”, meaning all of the assets acquired at that time; and which Mr. Killam, (Evi- dence, p. 6884) admits was the foundation of the original financing of the Famous Players Canadian Corporation, Limited or at least “ essential to assure the stability of the investment of the large amount of money being spent on theatres”, appears on page 30 of the minutes of the Famous Players. It is between Famous Players-Lasky Corporation, thereinafter called “the New York Corporation” and Famous Players Canadian Corporation, Limited, there- inafter called “the new company”. The New York Corporation grants to the new company for a period of twenty years the right, privilege and franchise to exhibit the productions made by the New York Corporation and its subsidiaries, in the theatres operated by the new company in the Dominion of Canada in each place where the new company or its subsidiaries operate a theatre, before such pictures are shown in any other theatre in said place, such right or privilege being generally known or referred to in the trade as a “first run.” The execution of this agreement was authorized on February 7, 1920, and has been apparently in operation since that time.
The franchise agreement was attached to and formed part of an agreement dated February 5, 1920, between Famous Players-Lasky Corporation, the pre- decessor of Paramount Publix Corporation, thereinafter referred to as “ the New York Corporation” and the Famous Players Canadian Corporation, Limited, thereinafter called “ the Canadian Corporation”. The latter acquired certain assets consisting of:
(1) All shares owned by Canadian Paramount Corporation Limited in:
(a) Regent Theatres Limited. (b) Strand Theatre Co. Limited. (c) Paramount Theatres Limited.
(2.) Properties of Canadian Paramount Corporation, Limited, in Van- couver, Winnipeg and Ottawa.
(3) The shares of Canadian Paramount Corporation, Limited, in Dominion Theatres (Vancouver) Limited, and Victoria Dominion Theatres Limited.
(4) All other assets of Canadian Paramount Corporation, Limited, except its shares in Regal Films, Limited, and Famous-Lasky Film Service Limited.
The last mentioned two companies are referred to above in the list of distributors.
The New York Corporation agreed to pay to the Canadian Corporation $3 720,000 in deferred payments, and in consideration of this the Canadian Corporation agreed to issue to the New York Corporation:
(1) 40,000 first preference shares... .. .. «+ ee e+ e+ oe oe $ 4,000,000 (2) 10,000 second preference shares? biccgs steesrfest =. sDhempive sy tS 1,000,000 (3) TS,0U0sCRIMTNON SLATES yA oie es eet one ee aime label wlan cic 88 o ine 7,500,000
Mahal Mh skp cree. dey ce ienctaaht Ay Seth ck ba ie atelier OG
2557—2
18
A large block of these shares were sold to the public by Royal Securities Corporation. The first preferred were all sold at its inception, and by this agree- ment Famous Players acquired and commenced operations as exhibitors with the following theatres:
(1) Regen’. «che sn uote 4 ee OOOO aoe eae - Ontario (2) Strands 5 ates yee ee 4 toys Ta aa (Bec LCC oA atthe ga) ec: dejeheter is ;
(4) Family.. oe. Cae
(5) Hig GCORGe .\-c eae ee oe
(G) CAUOIRDTG cic sone ere ae
(7) Garden.. See a ee 2 be
(8) Strand i. ss eye os ay ce SCOT. (now the Tivolt)
(9) Strand... “cs ss) cee, “ (10) Regent. Jct ee eee s se CUCUDI i ee ee # CLT) Regent) SOO, ie OE ee x (12) Dominion. v2... oe VOMCOUVET Te ae BG: C1). DOMgnIONe es oa Wiclorid. + 2 eee ha
On February 26, 1920, Messrs. A. Zukor, H. D. Cunnick, W. J. Sheppard, J. P. Bickell, J. B. Tudhope, N. L. Nathanson, W. D. Ross, I. W. Killam, Sir Herbert Holt and Lord Beaverbrook were elected directors of Famous Players Canadian Corporation, Limited, with Mr. Zukor as President, Mr. Bickell as Vice-President and Mr. N. L. Nathanson as Managing Director. The present Directors are: Adolph Zukor, President. J. P. Bickell, Vice-President. Arthur Cohen, Managing Director. Sir William Wiseman. I. W. Killam. W. J. Sheppard. J. B. Tudhope.
S. R. Kent. Mr. T. J. Bragg is Secretary-Treasurer. Messrs N. G. Barrow, C. Robson and H. Sedgwick are assistant secretaries.
Since its organization Famous Players has formed and acquired interests in many companies, and made agreements with many persons engaged in the motion picture business and its branches and offshoots, has acquired and entered into agreements for the operation, jointly and otherwise, of many theatres, details of which will appear later in this report when dealing specifically with these subjects.
2. B. & F. Tueatres Limirep
By an agreement (Exhibit 91) dated December 18, 1926, Famous Players entered into an agreement with Irving Samuel Fine and Samuel Bloom, lessees and operators of four theatres in Toronto and having the erection of an addi- tional theatre in contemplation. The agreement provides for the formation of a company to be called B. & F. Theatres Limited, with a capital of $100,000 divided into 1,000 shares of $100 each, and that the charter and by-laws should be prepared by Famous Players’ solicitors, and that the company’s affairs should be managed by four directors, two, the President and Secretary-Treasurer, to be nominees of Famous Players, and two, the Vice-President and Managing- Director, to be nominees of Bloom and Fine. It further provides that the Head Office of the company shall be in the office of Famous Players, and that the books and records shall be under the control of Famous Players.
19
The agreement further provides that Bloom and Fine should transfer to B. & F. Theatres Limited their interest in four theatres then operated by them, viz:
(1) La Plaza.
(2) The Christie.
(3) The Mavety.
(4) A theatre at Woodbine and Gerrard Streets, then about to be con- structed, later called The Gerrard,
all in Toronto, and that Famous Players should transfer its interest in five theatres, viz:
(1) The Teck (under lease to Paramount Theatres Limited from the owner, Famous Players).
(2) The Beaver (then under lease from one Joy to Beaver Theatre Co. Limited, a Famous Players incorporation).
(3) The York (under lease to Famous Players from one Dunning).
(4) The Classic (under lease to Paramount Theatres Limited from one Mazza).
(5) The Danforth East (under lease to Paramount Theatres Limited from Axler and Posnick).
The transfers were to be as of January 3, 1927.
The agreement provides that Bloom and Fine were to be employed by the new company and agree not to compete for a period of ten years in any capacity, or be otherwise than as such employees, engaged in any way in Toronto in the motion picture business. Bloom and Fine were to book and _ select pictures and other entertainments, “but they shall not contract for pictures or other entertainments of any kind without the approval in writing of Famous Players.”
The general policy of the new company was to be at all times subject to the approval of Famous Players, Bloom and Fine agreeing to conform to all requirements of Famous Players regarding the administration of BG Theatres, Limited. .
B. & F. Theatres Limited was accordingly incorporated under the Ontario Companies Act by letters patent dated December 31, 1926, and as a result of the carrying out of the agreement (Exhibit 91) the transfers were made, and Bloom and Fine on the one hand and Famous Players on the other hand each acquired a 50 per cent stock interest in the company, which each now holds. The first permanent directors were:
Clarence Robson, President.
S. Fine, Vice-President.
S. Bloom, Managing Director.
T. J. Bragg, Secretary-Treasurer.
Mr. Robson is supervisor of theatres in Eastern Canada for Famous Players. These persons have since held these offices and are the present holders.
B. & F. Theatres Limited controls, by 100 per cent stock ownership, Beaver Theatre Company, Limited, with an Ontario charter dated October 2, 1916, and a capital stock of $40,900. The lease of the Beaver Theatre above-men- tioned is vested in this company. The directors and officers are:
C. Robson, President, T. J. Bragg, Vice-President. S. Bloom, Managing Director. L. Geering, Secretary. S. Fine, Treasurer.
27557—24
20
B. & F. Theatres Limited, until October 17, 1930, held a 50 per cent stock interest in Carleton Theatre Limited which sublet the Greenwood Theatre to B. & F. Theatres Limited. The capital of this company is $50,000. The directors and officers are: W. A. Summerville, President. S. Bloom, Vice-President. C, A. Walton, Secretary-Treasurer. B. E. Knight. S. Fine. The Greenwood Theatre in Toronto was sold in 1930 to one Staniewiski, and the stock holdings were relinquished at the same time. B. & F. Junction Theatre, Limited, was formed as a subsidiary of B. & F. Theatres, Limited, with a capital of 8,000 no par value shares, of which 1,725 shares are said to have been issued at a valuation of $5 each. This company, though still subsisting, has not entered upon active operation. The directors and officers are: C. Robson, President. ia brace. fresacstuer. S. Bloom.
The Secretary is N. G. Barrow.
3. EASTERN THEATRES LIMITED
Eastern Theatres Limited was incorporated by letters patent under the Dominion Companies Act and dated May 12, 1919, with head office at Toronto, and with a capital of $1,800,000, being $1,000,000 7 per cent cumulative prefer- ence and 32,000 common shares of the par value of $25 per share. Of this, $500,000 of preferred and all of the common shares were issued. The company operated the Pantages Theatre (now the Imperial) in a downtown first run location in Toronto. In November, 1927, Famous Players acquired control through the purchase of a majority stock interest. On October 20, 1927, the directors were:
J. P. Bickell.
N. L. Nathanson. W. J. Sheppard.
J. B. Tudhope. Frank EK. Maulson., Hon. W. D. Ross.
About 75 per cent of the share capital was acquired by Famous Players in 1927, and by August 18, 1930, by further acquisitions, the stock interest of Famous Players had been increased to 93-60 per cent. As of this date the directors and officers were: ;
A. Cohen, President.
C. Robson, Vice-President.
N. G. Barrow, Secretary.
T. J. Bragg, Treasurer.
H. Sedgwick, Assistant Treasurer. John Arthur.
Mr. Arthur is an employee of Famous Players, directing entertainments.
4. Premier THEAtRES LIMITED
This company was incorporated by the Allens with an authorized capi 1 / SW pital of $50,000—5,000 common shares of $10 each, and with an issued capital of $50, and all the issued capital stock was acquired by Theatre Holding Corpora-
21
tion, Limited, under agreements dated January 2, 1928 (Exhibits 117-A and 117-C), and an agreement dated May 1, 1928 (Exhibit 117-B). This company operates the Weston Theatre, Weston, Ontario, under lease and agreement with A. Cohn on a 50 per cent profit sharing basis. The directors and officers are:
H. Allen, President.
A. Cohn, Vice-President.
S. Crafton, Secretary-Treasurer.
5. MANSFIELD THEATRE CoMPANY, LIMITED
This company was incorporated under the Dominion Companies Act by latters patent dated July 31, 1923, with a capital of $1,750,000 authorized and all issued, being 7,500 preference shares of $100 each and 10,000 common shares of the par value of $100 each. The voting rights are vested in the holders of common shares. The head office is at the office of Famous Players at Toronto.
The company owns and operates Loew’s Theatre, Montreal. Loew’s Montreal Theatres Limited, the former owner of this theatre, in the fall of 1922, was in financial difficulties and Famous Players advanced to it $100,000 by way of loan under agreement of March 21, 1923 (Exhibit 28-B), which provided for the purchase of the business of the Loew Company as a going concern, and the formation of a new company, to be promoted and organized by Famous Players, which was organized as Mansfield Theatre Company, Limited. The preference stock and 2,500 common shares were issued to the Loew Company as part consideration for the sale, and the Mansfield Company assumed the debts of the Loew Company up to $325,000. The Loew Com- pany also agreed not to compete in Montreal.
The Loew theatre was transferred to the new company in due course and has since been owned and operated by it. Under the agreement Famous Players was to receive and did receive 51 per cent of the common shares, and the balance thereof, except the 2,500 shares above mentioned, were issued to Marcus Loew’s Booking Agency of New York in satisfaction of their claims against the Loew Company. (Evidence, p. 379.) The consideration for the issue of 51 per cent of the common shares to Famous Players was the undertaking “of the reorganization and seeing that the company was financed properly.” (Evidence, p. 381.) Famous Players were to receive a booking fee of $100 per week during the life of the agreement, twenty years.
6. Unrrep AMUSEMENT CorRPoRATION, LIMITED
By an agreement (Exhibit 27-A) of September 9, 1924, between United Amusements Limited, of the First Part, and Independent Amusement Limited, of the Second Part, and Famous Players Canadian Corporation, Limited, of the Third Part, it was agreed that the United Amusements Limited and Inde- pendent Amusement Limited would cause a company to be formed under the name “United Amusement Corporation, Limited.” United Amusements Limited agreed to transfer all its assets as a going concern, including 17 theatres, all in the Province of Quebec, to the new com- pany for shares of that company. Independent Amusement Limited agreed to surrender 2,689 shares of United Amusements Limited for cancellation. United Amusements Limited agreed to surrender 160 shares of Independent Amusement Limited for cancellation. Famous Players Canadian Corporation Limited agreed (a) to give the new company the benefit of its franchise agreement with Famous Players-Lasky Corporation of January 20, 1920;
(b) until December 31, 1939, not to own or be interested in any theatre in Montreal, outside of the down-town district bounded by St. James, Bleury, Sherbrooke and Guy streets,
(c) to purchase 350 preference shares of the new company at par.
22
In pursuance of the terms of this and other subsequent agreements, United Amusement Corporation, Limited, was incorporated under the laws of the Province of Quebec, with its head office at Montreal. Shares were issued as follows:
Class A tio’ par shares. 000022 5.7.0) se ON aie te Glass B no par value.. |... 2+) :<.. 1 ey: eee
of which Famous Players have acquired:
Class A—28-07 per cent. Class B—28-52 per cent. (Evidence, p. 336.)
By agreement (Exhibit 27-C) dated September 9, 1924, it was agreed that a pool be formed of certain shares of Famous Players and other share- holders sufficient to constitute control for 15 years. Under this agreement Famous Players deposited 4,500 shares and other shareholders deposited 3,400 shares, a total of 7,900 shares. Voting power in respect to these shares was vested in seven voting trustees named in the agreement, two of whom were N. L. Nathanson and J. P. Bickell of Famous Players. The pool may be dissolved on a vote of the majority of the voting trustees, but I am informed that the pooling agreement is still in force.
Pursuant to the agreement (Exhibit 27-A), two nominees of Famous Players are on the directorate of this company. Upon incorporation, 17 theatres, including one in Sherbrooke, one in Lachine and the other 15 in Montreal, were transferred to United Amusement Corporation, Limited. On November 1, 1927, Famous Players, by an agreement with Standard Amuse- ment Corporation, Limited (Exhibit 27-F) acquired control of the Park Theatre, Verdun, Quebec, which was thereafter to be considered as part of the Famous Players chain. Famous Players agreed not to be interested in any theatre within a mile of the Park, and if it did, the net profits were to be divided in the same proportions as the net profit of the Park. Famous Players thus acquired the right to dictate what pictures should be shown at this theatre for the period of ten years from the date of the agreement, and for a like period the right to a 50 per cent share of the profits, all without any capital invest- ment on its part. United Amusement Corporation, Limited, joined in the agreement to covenant that it would not construct or have any interest in any theatre within a mile of the Park Theatre. -
By agreement dated November 14, 1927 (Exhibit 27-G) Famous Players agreed to pay to United Amusement Corporation, Limited, all money received under the agreement (Exhibit 27-F) aforementioned. Subsequently two other theatres in Montreal and one in Lachine were acquired by United Amusement Corporation, Limited, its chain now comprising 21 theatres.
7. Unrrep Tueratres Limirep
This Company was incorporated under the Ontario Companies Act by letters patent dated November 27, 1918, with a capital of $100,000, being 1,000 shares of $100 each, of which 850 shares have been issued. The Head Office was originally in Sarnia, Ontario.
On December 19, 1927, Famous Players acquired 427 shares of this com- pany, being 50:23% of the issued capital stock, for $100,000 in cash (Evidence p. 3400-3402). Famous Players books for the theatre, and receives a bocking fee of $100 per week. The directors and officers at the opening of this investi- gation were:
C. Robson, President.
J. F. Meyers, Vice-President.
N. G. Barrow, Treasurer.
H. Sedgwick, .
23
All are executive officers and employees of Famous Players, except Mr. Meyers, who was one of those from whom Famous Players purchased stock. Mr. Meyers has recently died and at the tame of taking the evidence on this subject no director had been elected in his place.
There is another company incorporated in British Columbia called United Theatres Limited, which is or was controlled by W. P. Dewees, and which will be referred to in another part of this report. |
8. Tueatre Houping CorporsaTION LIMITED
_ This company was incorporated by letters patent dated March 9, 1928, issued under the Ontario Companies Act, with an authorized capital of $170,000, divided into 1,500 preferred shares of $100 each and 20,000 common shares of $1 each. All of the capital has been issued. This is a holding company, 50% of both preferred and common shares being held by Famous Players, and the balance having been issued to the Allen interests. The directors and officers are: H. Allen, President. A. Cohn, Vice-President. S. Crafton, Secretary. T. J. Bragg, Treasurer. The holdings of the company are (Exhibit 6, p. 10): (1) Brock Theatre Limited—All the issued shares ($50 par value). This company does rot operate a theatre but owns lands on Eglinton and Livingstone Avenues, Toronto. (2) Crystal Theatre Limited—All the issued shares ($50 par value). This company operates the Royce Theatre, Toronto. (3) Federal Theatre Limited—All the issued shares ($50 par value). Owns the Hollywood Theatre, Toronto. (4) Gem Theatre Limited—All the issued shares ($50 par value)- Operates the Capitol, Smith's Falls. (5) Trent Theatre Limite’—75 per cent of $39,000, the total issued capital stock. Operates the Capitol Theatre (originally the Temple), Wallaceburg, On- tario. (6) Leamington Theatre Limited—7o per cent of the issued capital stock of $39,000. Operates the Capitol Theatre, Leamington. | (7) Model Theatre Limited—All the issued shares ($50 par value). Owns and operates the Capitol Theatre, New Toronto. (S) Monarch Theatre Limited—All the issued shares of $8,200 par value. Owns and operates the Classic Theatre, Cobalt, Ontario, and controls under lease the Broadway Theatre, Haileybury, Ontario, which is closed. (Exhibit 6, p. 10.) (9) Premier Theatres Limited—All the issued capital stock ($50 par value) the authorized capital being $50,000. Leases and operates the Weston Theatre, Weston, on a 50 per cent profit sharing basis. See also pp. 20 and 21 of this report. (10) Savoy Theatre Limited—Al! the issued shares ($50 par value). _ Owns and operates the King George Theatre, Port Colborne, Ontario. (11) Victoria T heatre Limited—All the issued shares ($50 par value). Operates under lease the Park Theatre, Preston, Ontario.
24
The minute book and other corporate records of this company and its sub- sidiaries have not been investigated except such records as were obtained in the offices of Famous Players, which are separate from those of Theatre Hold- ing Corporation, Limited.
Theatre Holding Corporation, Limited, was incorporated in pursuance of an agreement dated January 2, 1928, between Herbert Allen, called “Allen,” of the first part, Rae Allen, Sara Allen, Blanche Rosenfeld and Sol Allen, of the second part, and Famous Players Canadian Corporation, Limited, of the third part. By this agreement (Exhibit 117-A) Famous Players purchased for $32,500 shares of Allen and the parties of the second part in certain companies, and their interests in certain leases of theatre properties.
It was agreed that a holding company should be formed with the wide powers set out in the agreement. Shares except qualifying shares, were not transferable except on the consent of two directors. ‘The number of directors was to be four, two of whom should be nominees of Allen and two of Famous Players. It was also provided that on an equality of votes, the president or chairman should not have a second or casting vote, and that the quorum should be four directors.
The shares and leases above mentioned were to be transferred to the holding company for $170,000, being $150,000 1m preference shares at par and 20,000 in common shares at $1 per share, to be divided fifty per cent to Allen and the parties of the second part on the one hand, and fifty per cent to Famous Players. Provision was made that if Allen or the parties of the second part acquired a theatre or motion picture enterprise, it should be offered to the Holding Company at the price and upon the terms on which it was acquired.
It was further agreed that the business of all theatre companies and of the theatres mentioned in the agreement or acquired thereafter should be managed and operated by Premier Operating Corporation, Limited, a company with an Ontario charter controlled by the Allens, so long as either Jule Allen or J. J. Allen is actively associated with the operating company, or both Herbert Allen and Louis Rosenfeld are so associated. Provision was made for the purchase of shares in the Monarch Theatre Limited, and the leases of the Princess and the Park Theatres in Preston, Ontario.
It was also provided that if motion picture enterprises were acquired by Allen or the parties of the second part in the City of Montreal, under an agree- ment dated June 1, 1926, between Amherst Theatres, Limited, Allen’s Westmount Theatre, Limited, of the second part, Herbert Allen of the third part, and United Amusement Corporation of the fourth part, or if Allen or the party of the second part should acquire a motion picture enterprise in Kitchener or Stratford, they should not be required to offer such motion picture enterprise to the Holding Company.
It was further provided that in case Premier Theatres, Limited, or any other company owned or controlled by the Holding Company, should acquire the Mt. Dennis Theatre at Mount Dennis, such theatre should be operated under an arrangement similar to that under which the Weston Theatre was then being operated by Abby Cohn. (See Premier Theatres Limited, supra).
| A reference was also made to a supplemental agreement of January 2, 1928, (Exhibit 117-C) which is between the same parties as Exhibit 117-A except the eee Company, and it provided that if Allen or the parties of the second at aa a we from the date thereof acquired any theatre property or pean pe ay bilder or lease of such and decided to erect a theatre coal aie ae z ne property to any other person for such purpose, then they should first offer such property or contract to the Holding Company or to a es ae) of the Holding Company at the same price and upon the same ae wes oee as the same was acquired, or at an appraised value in
ay ae 1e Holding Company did not take over the property, the
25
party who originally acquired had the right to deal with the same or with such a contract as wes mentioned for its or their sole use and benefit subject to the provisions of this agreement. These parties were not to compete against each other in the motion picture business.
A further agreement was entered into (Exhibit 117-B) dated May 1, 1928, between the parties of the agreement of January 7, 1928 (Exhibit 117-A) and Theatre Holding Corpcration, Limited, called “the Holding Company ” of the fourth part. This implements and carries out the provisions of the agreement (Exhibit 117-A) called “the principal agreement” and also the agreement of January 2 (Exhibit 117-C), called “the supplemental agreement +2
The companies referred to in Schedule “ A” are:
(1) Premier Theatres Limited.
(2) Richmond Theatre Limited.
(3) Victoria Theatre Limited.
(4) Sherbourne Theatre Limited.
(5) Crystal Theatre Limited.
(6) Wallaceburg Theatre Limited.
(7) Monarch ‘Theatre Limited.
(8) Brighton Theatre Limited. the shares of which were transferred as of January 1, 1928, to the Holding Company. It is to be noted that these theatres are not the same as those presently held, as appears, ante, by reference to Exhibit 6.
Schedule “ AA” discloses the interests in the Park Theatre and the Princess Theatre, Presten, which interests were transferred to the Holding Company. Schedule “B” sets out particulars of the leases of 8 theatre companies oper- ating or controlling 19 theatres as follows:
(1) Grand, Pembroke.
(2) Casino, Pembroke (closed).
(3) O’Brien, Renfrew.
(4) Casino, Arnprior.
(5) Orpheum, Almonte.
(6) Princess, Smith’s Falls (closed).
(7) Weston, Weston.
(8) Rideau, Smith’s Falls.
(9) Star, Carieton Place.
(10) Gem, Prescott.
(11) Empress, Kemptville.
(12) Temple, Wallaceburg. (Nors.—In Wallaceburg, one T. Martin agreed not to complete
his property as a theatre).
(13) Patricia, (re-named Capitol), Leamington.
(14) Park, Preston.
(15) Princess, Preston (closed).
(16) Royce, Toronto.
(17) Classic, Cobalt.
(18) Bijou, Cebalt (closed).
(19) Broadway, Haileybury.
26 9. Hamiuton UNITED THEATRES LIMITED
This was an Ontario company having a great many shareholders and which, according to the evidence (p. 1237), had merged with Loew’s Hamilton Theatre, Limited, and under the merger Mr. Strachan Johnston became a director of Hamilton United Theatres Limited and was so at the time the agreement here- inafter mentioned was entered into. Incidentally, his firm were solicitors for Famous Players Canadian Corporation, Limited, but this was only incidental and had no particular significance.
Under an agreement (Exhibit 29) which will be dealt with more fully here- after, a new company, which was formed under the name of Radio-Keith- Orpheum Canada, Limited, was to endeavour to arrange, if deemed advantageous, a purchase of the properties of the Hamilton United Theatres or a substantial block of its shares. Radio-Keith-Orpheum Company did not acquire any interest in the Hamilton Theatres, and apparently the matter was dropped for some time. '
Subsequently, on February 7, 1930, an agreement was made between Hamil- ton United Theatres Limited called “The Hamilton Company” and Famous Players Canadian Corporation, Limited, called “Famous Players Company” (Exnibit 105). The Hamilton Company owned the Capitol Theatre and Pantages Theatre in the city of Hamilton, and the Famous Players Company, through stock ownership in Brighton Theatre, Limited, and Paramount Theatres, Limited, controlled the Tivoli and Savoy Theatres in Hamilton respectively, and the agreement recites that the parties have agreed that the said four theatres should be operated jointly under the management of Famous Players Company, and the parties agreed as follows.
Famous Players agreed to manage and operate the four theatres for ten years from March 1, 1930, and during such period to book motion pictures and other attractions and entertainments therefor, such as in the opinion of Famous Players should tend to promote the profitable operation of said theatres. The selection of pictures, artists, performances and other forms of entertain- ment was to be in the sole discretion of Famous Players, and they could from time to time close any one or more of the said theatres and keep same closed as they might consider advisable.
The joint earnings were to be applied in payment of operating expenses as’ defined and all rentals as set out ‘in the agreement, and the balance divided on the following basis: of the first $210,000 in any year Famous Players is entitled to receive 75 per cent and the Hamilton Company 25 per cent, and profits over this amount are to be divided between the parties in equal shares. Pro- vision was made that if the amount available for distribution in any year was not equal to $210,000, an adjustment should take place the following year when that amount would be earned. Provision was made for a reserve of $25,000.
The books of the Company were to be kept by Famous Players, and they were to be paid a booking fee of $100 per week. Included in the expenses is an item of $56,153 which was to be paid to the Hamilton Company as rental o the Capitol Theatre and Pantages Theatre. It should be mentioned that Rega Players had been operating these two theatres for Hamilton United
or ne Adobe previous to the entering into of this agreement. It was further aie ae a a in ee of Famous Players it was advisable to con- rene ie ae aon ae says theatres in Hamilton within a radius of three- Ea iidiscch eee fra de free Theatre, they should be entitled to erect es thang: ae re, in w uch event the provisions of the agreement should:
Mi i] eatre for the balance of the ten-year term, there being paid ao i amous I ‘ayers as rent 8 per cent of the cost of the new theatre. Famous et ae ah ee quing the continuance of this
M9 suruct, lease, manage or be otherwise interested in any
27
theatre or theatres not then in existence outside of the three-quarter mile radius, it would not permit the exhibition therein of any motion picture without first exhibiting it in one of the said theatres within the said radius. Famous Players agreed practically.to guarantee the rental of $56,153 payable to the Hamilton Company. Famous Players has no stock interest in Hamilton United Theatres Limited.
10. ParamMouNT PuBLIx CORPORATION
This corporation was organized under the name famous Players-Lasky Corporation by virtue of the laws of the State of New York on July 19, 1916. In 1927 the name was changed to Paramount Famous Lasky Corporation, and in 1930 to Paramount Publix Corporation. Its principal office is in New York City, with branch offices in the principal cities of the United States and in other countries. It is engaged in the business of producing, distributing and exhibiting for profit motion pictures in the United States and other countries, and owns and operates studios where it makes or produces motion picture films, labora- tories for the making of positive prints from the negative films, maintains exchanges for the leasing and distribution of the positive prints, and owns, and/or operates under lease or otherwise a large number of theatres, about 700 in the United States. Adolph Zukor is its president and is now and has been throughout its dominating personality.
This corporation is in virtual control of Famous Players Canadian Cor- poration Limited by its ownership of 93-786 per cent of the issued shares, and this notwithstanding the voting trust agreement above referred to (Exhibit 115). It also holds seven-eighths of the shares of Canadian Paramount Corporation Limited, which in turn owns or controls 100 per cent of the shares of Famous Lasky Film Service Limited and Regal Films Limited. It is a dominating influence in the motion picture business in Canada, as it controls the companies which dominate the situation here.
11. OrHER PrRopUCERS AND/OR DISTRIBUTORS
CANADIAN EDUCATIONAL FILMS LIMITED, . CANADIAN UNIVERSAL FILM COMPANY LIMITED. FAMOUS-LASKY FILM SERVICE LIMITED.
FIRST NATIONAL PICTURES INCORPORATED. FOX FILM CORPORATION LIMITED.
R. K. O. DISTRIBUTING CORPORATION OF CANADA, LIMITED. COLUMBIA PICTURES OF CANADA, LIMITED. REGAL FILMS LIMITED.
UNITED ARTISTS CORPORATION, LIMITED. WARNER BROTHERS PICTURES INCORPORATED. VITAGRAPH INCORPORATED.
Vitagraph Incorporated is named in the Order in Council. This is a United States company having its head office in New York City, producing pictures under the name Vitaphone and distributing these pictures in Canada through Vitagraph Limited. s,s
First National Pictures Incorporated and Warner Bros. Pictures Incor- porated distribute through Vitagraph Limited and have not incorporated in Canada.
Columbia Pictures of Canada Limited—From page 6184 of the evidence it appears that the shares of this company, or at least a majority of them, are owned by Henry L. Nathanson, General Manager of Regal Films Limited; Herbert Allen, President of Theatre Holding Corporation and an officer of Premier Operating Corporation Limited; L. Rosenfeld, and the wife of Arthur
28
Cohen, the Managing Director of Famous Players. Louis Rosenfeld is the manager of this company and it holds a franchise from Columbia Pictures Corporation, the United States producing company.
By an agreement (Exhibit 348) dated April 6, 1928, Columbia Pictures of Canada Limited gave to Famous Players for the five succeeding years the right to a first choice of its pictures for exhibition in the Famous Players first run houses in 13 named cities, being Montreal, Ottawa, Toronto, Hamilton, London, Windsor, Regina, Saskatoon, Edmonton, Calgary, Vancouver, Victoria and Winnipeg, at the rentals Famous Players pay to other distributing agencies in the same theatres for the same class or type of picture. ay
Theatre Holding Corporation Limited has a somewhat similar franchise, but it is to be observed that Famous Players has a 50 per cent interest in Theatre Holding Corporation Limited, and that the first run theatres of Famous Players in the cities named above are not in competition with those of Theatre Holding Corporation, Limited.
With the exception of Vitagraph Incorporated, First National Pictures, Incorporated, and Warner Bros. Pictures Incorporated, the above-named com- panies are as previously pointed out Canadian companies, wholly or substan- tially, as the case may be, controlled by the producing companies in the United States whose pictures they respectively distribute. Columbia Pictures of Can- ada, Limited, is, however, as previously noted, not so controlled, its shares being held in Canada.
12. Motion PicrurE DISTRIBUTORS AND EXHIBITORS OF CANADA
This company was incorporated (Exhibit 231) by letters patent dated November 12, 1924, issued under the Dominion Companies Act upon the appli- cation of John Alexander Cooper, journalist; Arthur Cohen, then Vice-President of Regal Films Limited; Philip Reisman, then Manager of Famous Lasky Film Service Limited; Clair Hague, Manager of Canadian Universal Film Company, Limited; and Louis Bache, then Manager in Canada of First National Pictures, Inc. The company has no share capital. The objects as expressed in the application for incorporation and in the letters patent are:
_ “To promote and conserve the cOmmon interests of those engaged in the motion picture industry in the Dominion of Canada by establishing and maintaining the highest possible moral and artistic standards in motion picture production, by developing the educational as well as the entertainment value and the general usefulness of the motion picture by diffusing accurate and reliable information with reference to the industry, by reforming abuses relative to the industry, by securing freedom from unjust or unlawful exactions and by other lawful and proper means.”
The operations are to be carried on throughout the Dominion of Canada and elsewhere. The head office is at Toronto. It is declared that the business of the corporation shall be carried on without the purposes of gain for its members and that any profits or other accretions to the corporation shall be used in promoting its objects.
Page 3591 of the evidence discloses that Col. Cooper “had been for three or four years Secretary of a motion picture association of a similar character ” which was not incorporated but which was performing to some extent at least the functions which have since been performed by this company after incor- poration.
MEMBERSHIP
j _, Lhe membership, by article II of the General By-laws, (Evidence, p. 3598) is divided into six classes: .
Class ‘A’—Distributor members.
Class ‘B’—Exhibitor members. Class ‘C’—Producers,
aa ee: ss ‘D’—Individuals nominated by Distributors.
Class ‘E’—Individuals nominated by Exhibitors and Producers. Class ‘F’—Other individuals.
20
On December 29, 1924 (Evidence, p. 3609) some 24 applications were received from various companies, mostly United States producing companies and including Regal Films Limited, for Class A membership. These were elected and asked to name Class D members.
On page 3715 appears a list of Class A members paying dues. These are:
(1) Educational Film Exchanges.
(2) Famous Players Lasky Corporation.
(3) First National Pictures Inc.
(4) Fox Film Corporation.
(5) Universal Pictures Corporation.
(6) Regal Films Limited. (7) Producers’ Distributing Corporation. (8) Warner Bros.
These names in this list clearly indicate that the association is financed by United States producers, Regal Films Limited apparently being the only Cana- dian distributor in the list. The association started to function (Evidence, p. 3710) on the first Monday in January, 1925, and the members started to pay weekly dues on January 3 or 4, 1925.
On April 8, 1925, (Evidence, p. 3677; Minute Book, p. 28, item 52) applications were received for Class B (Exhibitor) membership from the fol- lowing:
(1) Famous Players Canadian Corporation, Limited (five members). (2) Paramount Theatres Limited (four members). (3) Allen St. Catharines Theatre, Limited. (4) Allen London Theatre Limited. (5) Oakwood Amusement Company Limited. (6) Hamilton United Theatres Limited. (7) Palace Theatre Limited (Montreal). ) Paramount Brantford Theatres Limited. (9) Paramount Kitchener Theatre Limited. ) Paramount Peterboro Theatres Limited. (11) Strand Hamilton Theatre, Limited. (12) Allen’s Kingston Theatre, Limited. (13) Stratford Theatres Co. Limited.
(1) J, R. Muir, Capitol, Vancouver.
(2) Ray Harrison, Capitol, St. Catharines. (3) T. W. Logan, Capitol, London.
) H. M. Thomas, Capitol, Winnipeg.
) John Hazza, Capitol, Calgary.
(6) John Arthur, Shea’s Hippodrome, Toronto. ) H. S. Dahn, Capitol, Montreal.
(8) J. Craig, Jr., Oakwood, Toronto.
) George Stroud, Capitol, Hamilton,
(10) George Rotsky, Palace, Montreal.
(11) E. Moule, Brant, Brantford.
(12) J. H. Allen, Capitol, Kitchener.
(13) A. G. Crowe, Capitol, Peterboro.
(14) John G. Green, Capitol, Guelph.
(15) H. E. Wilton, Strand, Hamiiton.
30
(16) Leonard Bishop, Regent, Ottawa.
(17) E. C. Smithers, Capitol, Kingston.
(18) J. V. Wend, Classic, Stratford.
(19) C. Robson, Paramount Theatres, Toronto. (20) E, Landsborough, Regent, Galt.
Each of these Class E members was at the time an employee of Famous Players or its subsidiaries or affiliated companies.
The initia! financing of this association was by way of loan of $2,500 from Motion Picture Producers and Distributors of America, commonly called the “Hays Organization,’ which is the United States pattern on which this Cana- dian Association (hereinafter referred to as the “Cooper Organization”) was patterned and from which it originated, and from which it has derived its inspiration, and with which it has kept in close touch throughout, which collects as will appear later the bulk of its funds (in the 52 weeks ending December 31, 1929, of a total revenue of $27,236.56, New York contributed $21,841.56, the balance $5,160 being collected in Toronto—see Evidence, p 4254), and which in fact dictates its policies and conirols its activities.
There as, however, one important difference in that the Hays Organization is frankly an association of producers and distributors, while the Cooper Organization professes or rather professed to have as members, and to act on behalf of, exhibitors as well as distributors. This, however, was a mere subter- fuge, as the only exhibiting members were Famous Players and their affiliations and employees, and as Col. Cooper states (Evidence, pp. 4256-7) :
“Wie did, however, have the name ‘ Exhibitors’ in the chartered name of our Company and so IJ arranged with Mr. Cohen and Mr. Bragg that we should have twenty of their men in as members nominally, in order that when I went to Ottawa or other places and dealt with the question of censorship, or amusement tax or copyright music or performing rights, I would be able to say that I repre- sented some of the theatre interests.
“Q. That was $480 worth of window dressing, was it?
“A. Correct, sir.
“Q. I see. Perhaps we might cut the whole discussion of that aspect of it short by my asking you if it is true that in substance and in fact this is a dis- tributors’ organization? 5
“A. I think that is correct, sir.”
The by-laws provide that the board of directors shall comprise six, to be
elected from Class D members (i.e. nominees of Distributor Company mem- bers) and two to be nominees of Exhibitor and Producer Company members, two others to be representative of all members and the remaining director, the president, to be appointed by the other directors. Five directors form a quorum. The officers are president, secretary and treasurer. Thomas J. Bragg of Famous Players was the first auditor and so continued tor the first few years. Arthur Cohen of Famous Players was the first secretary. Col. John A, Cooper was the first president and has since continually occupied that office. The first directors were the five provisional directors, viz: Col. Cooper, Mr, Cohen, Mr. Reisman, Mr. Hague and Mr. Bache.
_ At a meeting of directors on February 19, 1925, Mr. Ira H. Cohen of Fox Film Corporation, Limited, Mr. 0. L. Hanson of Canadian Educational Films Limited and Mr. J. W. Berman of United Artists Corporation Limited were present. The minutes are not very clear as to when new directors were elected, but it 1s quite clear from those listed in the minutes as present at meetings of directors that the directorate was added to and substitutions were made from time to time so that there was a board of from eight to ten members besides the president, who except him were always representative of the distributor agencies in Canada of the United States producers. On April 8, 1925, Mr. Clarence Robson was elected a director “to represent, Exhibitors”, Mr. Robson being an employee of Famous Players. On July 21, 1925, Mr. M. A. Milligan was
ol
elected a director instead of Mr. Reisman. On October 14, 1925, Mr. Je O eae ae one Fox Film Corporation Limited, replaced Mr. Ira Cohen on the board.
In the first annual report (Evidence, pp. 3715-6) appears this note:
“ Treasurer's Report:
“Copy of the Treasurer’s report for the year ending December 31, 1925 1s attached herewith. The procedure in connection with the collection of fees from distributors whose Head Offices are in the United States is as follows:
“The Motion Picture Producers & Distributors of New York were duly appointed our agents to collect these fees. When collected they are credited to the Canadian Association on the books of the Hays organization. A remittance is made from New York to this office once or twice each month. Other fees from Canadian distributing companies and_ exhibitor members are collected here and deposited to our own credit. Ali disbursements are made on the O. K. of the President of the Company. A weekly statement of receipts and disbursements is sent to Mr. J. Homer Platten, the Treasurer of the Hays organization. Monthly and quarterly statements are also made to him. The annual statement properly audited was also submitted to him and its receipt acknowledged on February 1, 1926. By this, method all receipts and expenditures are supervised by Mr. Platten in the New York office. Both budgets for 1925-1926 were submitted to the Hays organization through Mr. Platten and approved by them.
If at any time we should require to make a special assessment on our members the amount of the special assessment would be decided by the Directors here, approved by the Hays organization and collected from our members by Mr. Platten or whoever jis treasurer of that organization”.
On August 5, 1927, Mr. Arthur Cohen resigned his position as Secretary (Evidence, p. 3977) owing to the provision in the by-laws that no one directly interested in motion pictures can act as Secretary. Col. Cooper was appointed Secretary and has since held that office in addition to the office of President.
FILM BOARDS OF TRADE
Col. Cooper in his annual report for the year 1926 states (Evidence, p. 3717): “ Perhaps the most important development of our work during the past year has been the formation of the Film Boards of Trade”’ These were formed on the suggestion of Mr. Pettijohn, General Counsel for the Hays Organization, made on the occasion of a visit by him to Toronto and Montreal in May, 1925. This report further states:
“ Copies of the minutes of every meeting of the Film Boards Credit Committees and Arbitration Boards is forwarded to this office where these reports are inspected and filed. Where there are any doubts as to the propriety of any action on the part of the Film Boards, these doubts are submitted to Mr. Pettijohn in New York | for his advice or decision.”
On p. 3752 Col. Cooper says “ The Film Boards are absolutely under our control. We admit that”. Questioned by me as to whether he really admitted this, he further states: “ We direct their work . Mr. Burnett and myself”, and further:
“Q. Who is Mr. Burnett? Oh! in this office?—A. This office, sir.”
On p. 3971 appears a quotation, being item 301 of the minutes of a meeting of the Cooper Organization held on May 11, 1927, as follows:
“ Government of Film Boards
“The President submitted a letter which he desired to send out to all film boards explaining how far film boards were autonomous, how far they were re- sponsible to Colonel Cooper as Superintendent of Film Boards in Canada and financially to the General Managers Association. With one or two amendments
this circular was approved”.
liem 302—from the minutes of the same meeting:
“The directors re-affirmed the principle that all Film Board Secretaries should be hired and discharged only with the consent and approval of Colonel Cooper. He was also given power to discharge any secretary if he deemed it in the best interests of the Film Boards”.
32
At a meeting on August 31, 1927, Colonel Cooper was appointed Treasurer of the Canadian Film Boards of Trade, with power to open a bank account under that name to sign cheques and to handle all financial matters in con- nection therewith. (Evidence, p. 3984).
The Film Boards of Trade consist of the local managers of the Exchanges in the Key Cities, and there is one film board for each of these six cities. The Con- stitution of the Film Boards of Trade and by-laws relating to arbitration and the arbitration clause in the Standard Exhibition Contract, as adopted for Toronto and Montreal Film Boards of Trade, are contained in Exhibit 234 (Evi- dence, p. 3749). This is, according to Mr. Burnett, (Evidence, p. 3749) practi- cally a reprint of a similar document printed in New York. It provides, Article IV, that the membership shall consist of every person who is now or may at any time be placed in charge of a Film Exchange or a Branch Film Exchange, and that any member absenting himself from any regular or special meeting must furnish in writing reasons for failure to attend, which, if not satisfactory in the judgment of the membership, shall subject the member to a fine. The officers, according to Article III, are a President, Vice-President, Secretary- Treasurer and Executive Secretary-Treasurer. The duties of the Executive Secretary-Treasurer are defined, from which it would appear that he or she is to be the principal executive officer.
ARBITRATION
The bylaws relating to arbitration provide that the Board of Arbitration shall consist of six persons, three of whom shall be members of the Film Board of Trade, called ‘Distributors’ Representatives” and three of whom shall be proprietors or managers of theatres in the zone where the Film Board of Trade is located, called “ Exhibitors’ Representatives.” The three distributors’ repre- sentatives are to be selected by the members of the Film Board of Trade, to serve for one year, and the three exhibitors’ representatives are to be selected by the local Exhibitors’ Association. If not so selected, the exhibitors’ repre- sentatives are to be selected by the President of the Chamber of Commerce, and failing him, the Mayor of the city in which the Film Board of Trade is located; failing such selection, by the President of the Film Board of Trade. So far as the evidence goes, we find no case where the exhibitors’ representatives have been appointed otherwise than by the President of the Film Board of Trade except two, one in Toronto and one in the Maritime Provinces.
Article II gives the Board of Arbitration general power to determine dis- putes and controversies and make findings, and also, in the event of failure of the exhibitor to submit to arbitration or to comply with the award, or in the event the distributor has been found to have committed such a breach of contract as in the opinion of the Board justifies members in requiring security in future dealings with the exhibitor to fix the amount (not exceeding that specified in Article XIX of the uniform Exhibition Contract, hereinafter termed “the Arbitration Clause”) that each distributor may demand as security pur- suant to said Arbitration Clause. The amount fixed by the arbitration clause Is a Sum not exceeding $500 and not less than $100 for each existing contract.
As a means of persuading members to use only the uniform exhibition contract as it was then called, it is provided that the Board of Arbitration shall not be obliged to entertain any claim unless same arises under a contract substantially in accord with the uniform Exhibition Contract.
_ Article IV provides for enforcement of decisions of the Board of Arbitra- tion. The Board is required to notify the Secretary of the Film Board of Trade In writing of the names of any members, and the names and addresses of any exhibitors who have been found by the Board of Arbitration: (1) to have refused to submit to arbitration a controversy arising under a contract con- taming the arbitration clause, or (2) to refuse to comply with the decision of the Board of Arbitration, or (3) to have committed such a breach of contract
“
33
as in the opinion of the Board of Arbitration justifies the exhibitor in refusing to deal with the member or justifies members in requiring security in future dealing with the exhibitor; and, in cases where the exhibitor is the party at fault, of the maximum amount (not exceeding that specified in the arbitration clause) which each distributor may demand as security pursuant to the arbitra- tion clause.
Upon receipt of such information the Secretary of the Film Board of Trade is required to advise all members of the names and addresses of all exhibitors who shall have been found by the Board of Arbitration to have done any of the things specified above and of the sum which the arbitration board has fixed as the maximum which distributors may demand as security of the exhibitor. Upon receipt of such notice each member having a contract, or representing a distributor who has a contract, with the exhibitor named in the notice “shall” demand payment by the exhibitor of such sum, not exceding the maximum as in the judgment of such member or distributor shall be sufficient to protect him or it in the performance of such contract by the exhibitor; and upon failure to pay the amount of the security the member shall proceed either (a) to terminate the contract with the exhibitor, or (b) to suspend service until such exhibitor shall have furnished such security or complied with the decision of the Arbitra- tion Board. It also provides that if members refuse to comply with the decisions of the Board, they shall not have the right to redress from the Board upon any claim against any exhibitor until such member has submitted to arbitration or has complied with the decision of the Arbitration Board.
The Arbitration Clause referred to is of considerable length. It provides shortly that each party to the contract will submit to a board of arbitration all claims and controversies arising under the contract, and they further agree to abide by and forthwith comply with any decision and award of the Board of Arbitration, and that the same shall be enforceable in and by any court of competent jurisdiction. If the exhibitor fails or refuses to consent to submit to arbitration any claim arising under this contract, or any other film service contract providing for arbitration, or to abide by and forthwith comply with any decision of a board, or where a board states that security may be required, the distributor may demand as security for the performance by the exhibitor of the contract in question and of all other existing contracts, payment by the exhibitor of an additional sum not exceeding $500 and not less than $100 under each existing contract to be retained by the distributor until the complete per- formance of all such contracts, and then applied at the option of the distributor against any sums finally due, or against any damages determined by said board of arbitration to be due to the distributor, the balance if any to be returned to the exhibitor, and in the event of the exhibitor’s failure to pay such additional sum within seven days after demand, the distributor may at his option, by written notice to the exhibitor, suspend service until said sum shall be paid and/or terminate the contract.
These bylaws and rules were revised up to June, 1926 (Exhibit 247), the principal alteration being that two alternate distributors’ representatives and two alternate exhibitors’ representatives were to be appointed to act. It further provides that in case a controversy is decided in favour of an exhibitor, the Board of Arbitration may include in its award the sum to be paid by the distributor to the exhibitor, not to exceed the cost to the exhibitor of all railroad transportation from and return to the city or town in which the exhibitor’s theatre is located, and an additional sum not to exceed $10 if the exhibitor has attended the hearing. A reference is made to the “Standard Exhibition Contract,” which apparently at this time had been adopted fairly generally by the distributors.
Practically the same provisions are provided for enforcement of decisions of the Board, including the payment of the deposits above referred to, and
27557—3
34
these rules and regulations also for the first time provide for the establishing and operations of the Credit Committee, which rules and regulations are embodied in the exhibit and which provide that where a theatre is sold the members who have negotiated the sale shall promptly report the same to the secretarv of the Credit Committee, who shall list the sale and furnish copies of this list to the appropriate Film Board of Trade. The list is designated “Credit Information List.” Upon receipt of such list each member shall deliver to the secretary a statement of his existing contracts at each theatre listed and also a statement, if known, whether or not the exhibitor provided, as a condition of the sale, for the assumption and complete performance by the new owner of the contracts listed and if the new owner has agreed to such condition. f
Rule IV provides that the Secretary shall request the new owner to furnish to the Credit Committee within five days such information and references to enable the credit committee to intelligently report to the members on the credit standing of such new owner. A form of questionnaire was adopted.
Rule VI provides that if the new owner refuses or fails to furnish the information and references, the credit committee shall indicate such fact upon the credit information list by the letters ‘C. I. R.,’ meaning “ credit informa- tion refused.” Where the credit committee concludes upon information received that the transfer was made for the purpose of avoiding or being relieved of incomplete contracts for pictures, such conclusion is indicated in the list by the letters ‘ F. T.” Where the new owner does not care to assume and complete: all existing contracts entered into by the prior owner, the credit committee shall indicate on the credit information list under the heading “ cash security,” the amount of cash security not to exceed $1,000 as a reasonable sum which members shall require to be deposited as security for the full and complete performance for each contract thereafter made.
Rule VII provides that no member shall enter into a contract or contracts: for the exhibition of pictures at any theatre listed in the credit information list for a period of ten days from the date of the first appearance of such theatre upon such list, nor thereafter unless the new owner shall have paid in cash to: such member the amount of security specified as above. This does not prohibit spot booking during the said ten day period. _ Rule VIII provides for the removal of the theatre from the credit informa- tion list upon satisfactory evidence of credit of the new owner.
The Credit Committee have also the right under Rule IX to examine the books and records of members in respect only to an exhibitor who has sold or transferred his theatre and has failed to provide for the assumption by the new owner of existing incomplete contracts.
Rule X provides for the suspension or expulsion of members who violate: any of these rules or who fail to report any sale of which they have knowledge.
The arbitration clause remains very much as formerly. The constitution of the Film Boards of Trade remains practically as in Exhibit 234, there being, atin ne piper in the rules of arbitration to comply with changes in ae ae a : - a exhibition contract. The Credit Committee rules have
revis o Kebruary 1, 1927 (see Exhibit 248) but are in the main sub- stantially as set out in Exhibit 247. A further set of credit committee rules Stee ee rage ee eee yet been put in force in
8; a se or the lega | j ; as to the legality of the Credit Gunna aha bearcirer asst sor 8 it coe ee Se ee pe adopted January Aly 1927, and, as will States rules and reeulati pies } move yrcumanimaivm atin: Ce tates Ss and regulations, in fact Exhibit 242 seems to have been, as appears on its face, printed in New York. In June, 1928, these rules were revised (Exhibit 243) and contain very similar provisions to those in Exhibit rth
00
including the provisions for enforcement of decisions, the chief differences being in Section 9, Rule II, which provides that members of the Film Board of Trade shall not be entitled to the benefit of Rule IV, being the rule providing for enforcements of decisions of the Boards of Arbitration, unless the decision or award of the board determines a claim arising out of a contract which contains or incorporates by reference all of the principal articles of the Standard Exhibition Contract filed with the Motion Picture Distributors and Exhibitors of Canada, identified by the signature of its President on March 31, 1926, or a contract bearing date prior to April 1, 1926, which is substan- tially in accord with the uniform Exhibition Contract, or a contract which contains or incorporates by reference all the principal articles of the Standard Exhibition Contract filed on June 1, 1928, with the Motion Picture Distributors and Exhibitors of Canada. These dates have some significance and will be referred to in dealing with the developments of the Standard Exhibition Con- tract.
As will appear later, the Standard Exhibition Contract was revised as of May 15, 1930, and the rules were then amended to comply with the amend- ments to the contract and, as amended, are set out in Exhibit 244, the chief alteration being that the provisions for enforcement of the contract by require- ing deposits to be made are omitted, and provision is made for the payment of fees of the arbitrator by the unsuccessful party.
It is also provided that the Board of. Arbitration shall not entertain a sub- mission with respect to any claim unless the same arises out of a contract which contains or incorporates by reference all of the principal articles of the “Canadian Exhibition Contract” filed with the Motion Picture Distributors and Exhibitors of Canada bearing date May 15, 1930, and identified by the signature of its President, except with the written consent of both parties to such claim.
27557—33
IV. FAMOUS PLAYERS ACQUISITIONS OF THEATRES AND/OR INTERESTS IN SAME
(A) ORIGINAL CHAIN
It has already appeared, page 18 of this report, that Famous Players commenced business with thirteen theatres. These were acquired under agree- ment February 5, 1920, as follows, (Exhibit 124):
(1) Regent, Toronto.. .. .. .. By purchase of shares of Canadian Paramount Corporation in Regent Theatres Limited. (2) Strand Voronlo.a sj gece purchase of shares of Canadian Paramount Corporation Limited in Strand Theatre Co. Limited. (3) Teck, Toronto, . oe (4), Fania; POroaon: 4< cea (5) King George, Toronto.. (6) Alhambra, Toronto.. (7) Garden; Voronto 7 hyectcr (8) Strand, Kingston... .. .. .. (now the Trvolt) (9) Strand, Ottawa.. (10) Regent, Guelph.. (11) RegenigGaltas) +). eae (12) Dominion, Vancouver... .. . By a similar purchase of the shares of Dominion Theatres (Vancouver) Limited. (13) Dominion, Victoria.. .. .. By a similar purchase of the shares of Victoria Dominion Theatres Limited.
By purchase from Famous Players Lasky Corporation of all the shares of Paramount Theatres Limited owned by Canadian Paramount Corporation Limited.
eS eee
On February 26, 1920, the company took over from Mr. Nathanson an agreement to purchase land on the corner of Danforth and Pape Avenues, Toronto, on which was subsequently erected the Palace Theatre now owned and operated by Famous Players. (Minutes, p. 45, Evidence, p. 32).
At the same time an agreement to purchase land in Sault Ste. Marie was taken over. The Algoma Theatre, owned and operated by Famous Players, was afterwards erected on this land and opened in 1929.
Property on Seymour and Granville Streets in Vancouver was acquired from Canadian Paramount Corporation, Limited under the agreement of February 5, 1920. The Capitol Theatre was subsequently erected on this land.
There was similarly acquired, land in Winnipeg on which the Company erected the Capitol Theatre, (Evidence, p. 33).
Karly in 1920, properties on Sparks Street and Queen Street in Ottawa were acquired but no theatre has been erected on them. They are still held.
Paramount Theatres Limited, incorporated June 26, 1918, was and still is an operating company, of which all of the shares were acquired by Famous Players under the agreement of February 5, 1920. (Evidence pp. 18 and 1263.)
By an agreement dated February 26, 1920 (Evidence p. 39), Paramount Theatres Limited acquired 100 per cent of the shares of the common stock of . Paramount Oshawa Theatres Limited, but turned over 50 per cent of this to the underwriters for distribution with the preferred shares sold to the public. Shares have since been acquired so that now Paramount Theatres Limited owns 51:75 per cent of the common shares and Famous Players owns 31-34
36
OF
per cent of the common shares, which, subject to the rights of preferred share- holders on default of payment of dividends, gives Famous Players and its 100 per cent owned subsidiary control of Paramount Oshawa Theatres Limited. This company owns the Regent Theatre, Oshawa, Ontario, and is operated under an agreement (Exhibit 4) by Paramount Theatres Limited, which gives that company control of the management of the theatre and the selecting and booking of pictures for a period of twenty years. For this agreement to manage and book, Paramount Theatres Limited obtained $249,875 of common shares at par, about half of which was given to the underwriters for the purpose of bonusing the preferred shares (Evidence, p. 46). It is expressly provided that Paramount Theatres Limited “in no way guarantee the results of operating the said theatre or that the same will be profitable,’ nor is it “to become responsible . . . . in regard to the finances or liabilities of the theatre or the Theatre Company in any way.”
(B) BritisH CoLUMBIA 1. B.C. Paramount Theatres Limited
Upon the organization of Famous Players, and practically contem- poraneously therewith, they incorporated under the British Columbia Companies Act a company called “B.C. Paramount Theatres Limited.” The head office was at Vancouver, and the objects were:
(a) To take over the leases and equipment of: (a) The Dominion Theatre, Vancouver, (b) The Dominion Theatre, Victoria, (c) The Dominion Theatre, Nanaimo, and (d) The Rex Theatre, Revelstoke (this theatre was later dis- posed of), and certain shares, being 74:48 per cent of the issued capital of the Broadway Theatre Limited, operating the Broadway Theatre, Vancouver.
(6) To carry on the business in British Columbia and elsewhere of theatre proprietors, etc., also a large number of incidental and ancillary objects with power to carry them out.
The capital was $300,000, being 3,000 shares of $100, all issued and all presently held by Famous Players. This company is the principal subsidiary of Famous Players in British Columbia.
These four theatres were acquired under a basic agreement (Exhibit 218) dated November 28, 1919, between United Theatres Limited (Head Office, Vancouver, B.C), Dominion Theatre Company, Limited, and Victoria Dominion Theatre Company, Limited, and Western Theatre Company, Limited.
The two Dominion companies owned 50 per cent of the shares of the United Company and the Western Company owned the other 50 per cent; and the United Company had a leasehold interest in the four above-named theatres. By the agreement the interest of United Theatres in the theatres was to be transferred and assigned to one of the Dominion companies or to a new company to be formed. The United Theatres Limited passed into the control of the Western Company and Famous Players never acquired any interest in it. This company must be distinguished from the company mentioned on page 22 of this report, called ‘ United Theatres Limited,” incorporated in Ontario with °
ffice at Sarnia.
ei agreement dated December, 1919 _ (Exhibit 219), the Dominion Theatre Company Limited and Victoria Dominion Theatre Company, Limited, transferred to B. C. Paramount Theatres Limited the leases and equipment of the said four theatres and 110 shares of the capital stock of Broadway Theatre Limited, in consideration for which 3,000 shares, being the whole of the com- pany’s capital stock, were issued to the two Dominion companies. These com- panies have since passed out of business (Evidence, p. 3180).
38
The present Directors of B. C. Paramount Theatres Limited are:
A. H. Douglas, President.
T. J. Bragg, Vice-President. ; J. R. Muir, Managing-Director and Secretary. J: P. Bickell:
A. B. Robertson. Mr. Muir is the chief executive of Famous Players located in British Columbia. This company controls eleven theatres, all in British Columbia.
(1) The Dominion, Vancouver. (2) The Dominion, Victoria. (3) Capitol, Prince Rupert.
Leased in 1928 from the Prince Rupert Amusement Company Limited. The lease is Exhibit 25, dated October 22, 1925. The term is ‘hi yearer 1) ae rent is $8,000 per year and one-half of the profits. By agreement (Exhibit 23), dated March 21, 1929, B. C. Paramount Theatres Limited purchased from one Stewart P. McMordie, lessor of the Westholme Theatre, the only other theatre in Prince Rupert, the furnishings and equipment of that theatre for $15,000, af which $6,000 was payable as rent. McMordie agreed to close the theatre and not to permit any business to be carried on on the premises and to exclude the public from the building for one year from March 31, 1929. An agreement (Exhibit 24) of May 3, 1929, between Prince Rupert Amusement Company Limited, called “the Lessor” and B.C. Paramount Theatres Limited, called “the Lessee” recites an agreement by the Amusement Company to install an organ in the Capitol Theatre and that 8. P. MeMordie is the lessee of West- holme Theatre in Prince Rupert, and the Lessor and the Lessee have agreed that it will be to their joint advantage if the competition of such theatre can be eliminated, and to that end that the lessee purchase from McMordie all the furnishings of the Westholme for $15,000 in consideration of his not operating the said theatre. It also recites the agreement of March 21, 1929 (Exhibit 23): The lessor agreed to pay $4,500 of the amount payable to MeMordie and the Lessors’ obligation in regard to contributing to the cost of an organ for the Capitol is reduced from $8,000 to $3,500. Since March 31, 1929, the only oper- ating theatre in Prince Rupert has been the Capitol and the competition has been eliminated as contemplated.
(4) The Bijou, Nanamo. (5) The Opera House, Nanaimo. (6) The Capitol, Nanaimo,
These theatres, including the Capitol, formerly the Dominion, in Nanaimo, were pooled and since July 10, 1926, have been operated jointly with W. P. Dewees Limited, under an agreement of that date (Exhibit 7-A) between B.C. Paramount Theatres Limited, called “ The Paramount Company,” Famous Players Cana- dian Corporation Limited and Willis Perry Dewees, called * Dewees.”’ Dewees is the person mentioned in Exhibit 218.
The agreement recites that the Paramount Company is the lessee in possession of the Dominion Theatre, Nanaimo, the existing lease having been extended for five years from January 1, 1927, and that he controls by share ownership W. P. Dewees Limited, the lessee in possession of the Bijou Theatre, Nanaimo, the lease expiring January 1, 1929, and that he controls by share ownership First National Exhibitors Exchange Limited, the lessee in possession of the Opera House, Nanaimo, the lease expiring July 1, 1929.
It also recites that by an agreement of April 15, 1924, between the Para- mount Company and Dewees, arrangements were made to keep the said Opera House closed, each party paying $25 per week towards payment of the rent and other outgoings and expenses in connection therewith, and that Famous Players controls the Paramount Company by share ownership.
39
The agreement provides that the interests of the Paramount Company and Dewees as operators of moving picture theatres in Nanaimo shall hence- forth be pooled, and that the present leases and renewals thereof of the Dominion and Bijou Theatres and the Opera House shall henceforth be held for the equal and joint benefit of the Paramount Company and Dewees.
It also provides that “no party hereto shall become interested .... in any other theatrical, vaudeville or moving picture enterprise in Nanaimo,” and further “It is the intention that henceforth, so far as regards theatrical opera- tions in the City of Nanaimo, the Paramount Company and Dewees shall cease to be in competition.” The agreement is to terminate on December 31, 1931, and each party covenants with the other (Dewees also covenanting with Famous Players) not to take any lease of the theatre or theatres of which the other is the lessee. The Dominion Theatre is to be operated and the Bijou closed as from July 10, 1926, and the Opera House is to continue to be closed. The Paramount Company is to operate and manage the Dominion Theatre. Any new theatre in Nanaimo in which any of the parties to the agreement becomes interested is to be subject to the agreement and operated as provided therein. The agreement of April 15, 1924, relative to the closing of the Opera House is terminated.
A supplemental agreement of April, 1928, with the same three parties and in addition Amalgamated Theatre Company Limited and W. P. Dewees Lim- ited recites a lease dated March 13, 1928, from Frank L. and Ethel Inez Reynolds to the Amalgamated Company of the Bijou Theatre for:10 years from January 1, 1929, and an option to purchase at $30,000, and Dewees controls by share ownership the Amalgamated Company. The agreement provides that this theatre shall for all purposes remain subject to the provisions of the prin- cipal agreement as if this new lease had been taken in the name of Dewees.
No theatre other than the Dominion (the name of which has been changed to the “Capitol”) and the Bijou which was closed for a year and now runs silent pictures has been operated in Nanaimo since this agreement came into force, and competition there has been thus effectively eliminated.
(7) Starland and Gem, Nelson, B.C. (8) Capitol, Nelson, B.C.
An agreement of August 1, 1924, between B. C. Paramount Theatres Limited (called “the Paramount Company”), W. P. Dewees Limited, Famous Players Canadian Corporation Limited (called “the Famous Company”), and Willis Perry Dewees (called ‘“‘Dewees’’) recites:
- (a) that the Paramount Company and W. P. Dewees Limited are joint lessees of the Starland and Gem Theatres in Nelson under a lease dated August 1, 1924, and
(b) that Famous Company controls by share ownership the Paramount
Company and Dewees similarly controls W. P. Dewees Limited.
The agreement provides that:
(a) The operations of the Gem and Starland Theatres shall be pooled for the joint and equal benefit of the Paramount Company and W. P. Dewees Limited.
(b) Until otherwise agreed upon the Starland alone shall be operated and the Gem closed forthwith and only operated as agreed on.
(c) The Starland shall be operated by the Paramount Company.
(d) If a new theatre shall be built at Nelson by or on behalf of any party hereto or of any Company controlled by Dewees or Famous Players, such new theatre is to be brought into, this pooling arrrangement and the new theatre operated instead of the Starland on the terms provided for the operation of the Starland.
40
By an agreement (Exhibit 21) dated December 2, 1927, Marie Papazian, the lessor of the Starland Theatre to B. C. Paramount Theatres Limited and W. P. Dewees Limited, she being also in control of the lease of the Gem Theatre, agrees with B. C. Paramount Theatres Limited and W. P. Dewees Limited that the Gem theatre will not be used, operated or conducted as a motion picture theatre or for theatre purposes for five years from April 1, 1928, that she will forthwith alter the premises so as to render them unfit for such purpose, and remove opera chairs, projection machine and fittings, the screen and stage setting, and will not during said five years install a motion picture machine therein. The agreement came into effect on August 11, 1924, and the Gem Theatre was closed. It was subsequently turned into shops and has not since been operated as a theatre. The lease of the Starland from Marie Papazian is also dated December 2, 1927, and is Exhibit 22.
An agreement (Exhibit 9-B.) dated April 27, 1927, between the parties to the agreement of August 1, 1924 (Exhibit 9-A) recites that agreement as the “»rincipal agreement,” and also an agreement dated April 5, 1927, whereby the Paramount Company and W. P. Dewees Limited agreed with one Alfred Harold Green for the building by Green of a theatre in Nelson and for the lease by Green to them of the theatre upon completion. The agreement pro- vides that as soon as the Paramount Company and W. P. Dewees Limited shall have entered into possession of the new theatre the Starland and Gem shall be closed, and that the present leases of the Starland and Gem Theatres shall not be renewéd, unless both companies otherwise agree. It also provides that the new theatre shall be operated for the joint and equal benefit of the Para- mount Company and W. P. Dewees Limited under the provisions of the princi- pal agreement relative to the Starland. Green completed the theatre, called it ‘‘ Capitol” and by lease dated August 10, 1927 (Exhibit 8), leased it to B. C. Paramount Theatres Limited and W. P. Dewees Limited for 15 years from August 15, 1927, with an extension in case certain alterations or additions are made.
The Paramount Company and W. P. Dewees Limited entered into posses- sion, have since operated the Capitol under the joint arrangement, and the Starland has since remained closed except for 7 days between September 10 and October 1, 1927 (see Exhibit 225). The Capitol has thus been, since August, 1927, without competition in Nelson, a town of over 5,000 population.
(9) Capitol, Victoria, B.C. (10) Royal Victoria, Victoria, B.C.
The Capitol was acquired by Paramount. Victoria Theatres Limited April 23, 1921, a company with head office in Victoria, B.C., of which Famous Players holds 58-33 per cent of its stock. The theatre is leased to B.C. Para- mount Theatres Limited.
The Royal Victoria—Control of this theatre acquired by a pooling agree- ment (Exhibit 10-A) dated June 4, 1924, between B.C. Paramount Theatres Limited, Willis Perry Dewees, (referred to as “ Dewees”) and United Theatres Limited (referred to as “ United Company ’’). It recites that B.C. Paramount is the lessee and operator of Dominion Theatre, Victoria, that Dewees controls the United Company, the lessee of Royal Victoria Theatre under a lease to ieee August 1, 1923, from Victoria Opera House Company, Limited for ne ears from August £4923: and that the Capitol Theatre, Victoria, is owned
y Paramvuunt Victoria Theatres Limited (called “the Paramount Company ’’).
The agreement provides that: .
(a) the operation of the Capitol shall be under the management and supervision of Dewees, who is also to do the booking of First National Pictures and in respect to the booking of other pictures, he is to sub-
mit all proposed bookings and prices to B.C. Paramount Theatres Limited.
4]
(b) The present prices of admission shall not be changed without the approval of the lessee.
(c) The operation of the Royal Victoria shall be under the management and supervision of Dewees.
(d) The Royal Victoria shall not be used for moving pictures or vaude- ville but only for such other entertainment as shall be agreed upon.
(e) Any profit or loss from the operation of the Royal Victoria shall be credited or charged—60 per cent against the operation of the Canitol ice 40 per cent against the operation of the Dominion Theatre, Vic- ora.
(f) After a surplus of $5,000 has been accumulated and maintained
as a contingent fund, 50 per cent of the net profits shall be paid to
the United Company as and by way of consideration for the discon- tinuance of the Royal Victoria Theatre as a moving picture and
vaudeville theatre and the other 50 per cent shall be paid to the B.C.
Paramount,
The Lessee agrees with Dewees and the United Company that it will
not directly or indirectly lease or purchase or negotiate for the leasing
or purchasing of the Royal Victoria Theatre, and the United Company and Dewees agree each for itself and himself that they will not directly or indirectly lease or purchase or negotiate for the leasing or purchasing of the Capitol or Dominion Theatres, Vancouver.
(h) The United Company agrees with the Lessee not to assign, sublet, release or otherwise deal with its lease of the Royal Victoria Theatre, without the written consent of the Lessee, and the Lessee agrees with Dewees and the United Company not to assign, sublet, release or otherwise deal with. its lease of the Capitol Theatre without their written consent. i
An agreement (Exhibit 10-B) dated April, 1928, between B. C. Paramount Theatres Limited (referred to as the “Paramount Company”), Willis Perry Dewees (referred to as ‘‘ Dewees’’), The United Theatres Limited (referred to as the ” United Company ”), Amalgamated Theatre Company Limited (referred to as “The Amalgamated Company”), and W. P. Dewees Limited (referred to as the “Dewees Company”), refers to the agreement of June 4, 1924 (Exhibit 10-A) as the “ principal agreement ” ond recites a lease of the Royal Victoria Theatre from the Bank of Montreal to the Amalgamated Company for ten years from August 1, 1928, and provides that said theatre shall remain subject +o the terms of the principal agreement to the same extent as if the lease had been renewed in the name of the United Company.
A further agreement (Exhibit 10-C) dated November 20, 1928, between Famous Players Canadian Corporation Limited, W. P. Dewees Limited, and Royal Victoria Theatre Company Limited, refers to the lease of the Royal Victoria Theatre to the Amalgamated Company, and recites that W. P. Dewees Limited had purchased the Bank of Montreal’s reversion in the premises, and that Famous Players and the Dewees Company had agreed Famous Players should acquire a one-half interest therein. It provides that premises shall be transferred to Royal Victoria Theatre Company Limited as of August 1, 1928, and that Famous Players and the Dewees Company shall from time to time subscribe and pay for stock of the Theatre Company in equal amounts sufficient to meet annual mortgage requirements.
The Royal Victoria Theatre was maintained closed from June 4, 1924, till September 15, 1924. Since then it has been rented on an average of about twenty times yearly for legitimate road shows, other purposes, and for exhibition of motion pictures five times in all (Exhibit 225). It has shown a loss running
—*
(g
42
“into several thousands of dollars per year” (Evidence, pp. 106-107). Seventy per cent of the loss is borne by Famous Players, and that company charges 40 per cent against the operations of the Dominion Victoria Theatre (Evidence, p. 105).
(11) Broadway Theatre, Vancouver.
This theatre was acquired concurrently with incorporation of B.C. Para- mount Theatres Limited by acquisition of shares of Broadway Theatre Limited, and has since been operated.
It is to be noted that the Rex at Revelstoke and Gem at Nelson are no longer part of the chain.
2. Vancouver—Strand Theatre
Allen’s Vancouver Theatre Limited in October, 1923, owned, and still owns, the Strand Theatre. By an agreement (Exhibit 12) dated October, 1923, Famous Players agreed to sell to W. P. Dewees and John A. Schuberg, a partner of Dewees, 2,716 shares of Allen’s Vancouver Theatre Limited, then the subject of an action in which G. T. Clarkson, liquidator of the Allen Com- panies, was plaintiff, claiming the right to these shares which he had agreed to sell, if recovered, to Famous Players. Mr. Clarkson recovered the shares and they were delivered to Famous Players and in turn by them to Dewees and Schuberg’s nominee, a company called ‘Associated Investment Company, Limited,” which company in June, 1924, was the lessee and operator of the Strand Theatre under lease dated October 23, 1923.
An agreement (Exhibit 13) dated June 4, 1924, between Famous Players Canadian Corporation Limited, Willis Perry Dewees, W. P. Dewees Limited, and Eclipse Investment Company, recites that
(a) Allen’s Vancouver Theatre Limited is the owner of the Strand which is leased to and operated by the Associated Investment Company, Limited. _ (6b) The Associated Company is the owner of a large number of shares of the Allen Company, as is also D & S Investments Limited, all subject to certain payments of purchase money.
ae te) The capital of the Associated Company is 400 shares of $100 each, 1e€ y: ,
Wa P\ Dewees.cs ict ti. 0 melo ae eee oe ee act ie omer APE payee , Helinse Investment Co. Ltd!) . 2 v.20 a) ee Seta ea 199 Ji AL Schuberg. 0.40.0 nh. ee! Lupe it Sr 1 Mra, 82C sBehnbere.. 34 au) cal laae earl <& lat ie eee es pers &: 199 400
(d) The capital of the D & S Company is 52 shares of $100 each held by:
Shares Wily (Dewees au: cn nex bien vo sate Mee eae eee cisivteie® het ener aheneete iL W..P.. Dewees Limited... 207i"... 5 = a RPO RN! Pp 25 J. A. Sehuberg.. 2°25. J) TI, Te” eee 1 Mrs. N.C. -‘Schuberg is2 "2 rue ee eee bsties, Seek Nets 25 52
(e) Dewees has invited Famous Players to purchase the shares of Schuberg and Mrs. Schuberg in the Associated Company and the D & S Com- pany, so that Dewees (or the Eclipse Investment Company, Limited, and W. P. Dewees Limited, holding companies for Dewees) and Famous Players shall jointly and equally control the operation of the
Strand Theatre and the ownership of the said shares of the Allen Company. .
43
The agreement makes certain provisions for the carrying on the affairs of the Allen Company, the Associated Company and the D & § Investments Co. Limited, and in the result Famous Players and Dewees have a controlling interest 62-52 per cent in Allen’s Vancouver Theatre Limited, the earnings of which are distributed as set out in the graphic chart (Exhibit 20). See also Exhibit 6, p. 6, and Evidence, p. 160.
The Strand Theatre deal was the first association between Famous Players and Dewees. :
3. Langer Chain in Vancouver
This chain consists of six third run theatres in Vancouver, viz:
» Alma | Regent Grandview Victoria Kerrisdale . Windsor
Famous Players acquired control of these theatres by virtue of a lease (Exhibit 113) dated January 31, 1927, from one Joseph Francis Langer, the owner of the theatres, for ten years from February 21, 1927, with a right of renewal for a further term of ten years.
The correspondence, Exhibit 148 (217 letters and telegrams) in reference to Langer is largely between J. R. Muir and N. L. Nathanson, then Managing Director of Famous Players, and is quite interesting. For example, in a letter of August 23, 1926, Mr. Nathanson wrote to Mr. Muir in part as follows:
_ “T am still concerned about the Langer situation. However, no doubt he will make a substantial investment in the Orpheum Theatre and that might keep him from going any further. It is a situation that should never have been per- mitted to happen and never would have happened any place in the East.”
On September 13, 1926, Mr. Nathanson writes Mr. Muir:
“ Perhaps there may be some way of bringing Langer around so he will do business with us and that would be preferable to building another threatre in opposition. If, however, we cannot get together with him and he should build in Nanaimo or Nelson or some other place, it would not make a great deal of differ- ence, because we would have to stop him sooner or later... . You must. realize that my main reason for building in opposition to the Grandview is that I think it is the only profitable theatre he will have and once he realizes what our opposi- tion means he will be more willing to work with uss
On January 18, 1927, Mr. Langer wired Mr. Nathanson in part as follows:
“Tn view of threats by Thomas to build opposition theatre in Grandview .... in view of above facts I exceedingly regret that I cannot enter into any group arrangement with your Corporation than purchase outright ... . i
On January 19, 1927, Mr. Thomas, who was Mr. Nathanson’s personal repre- sentative, wired him: “ After all day session at seven p.m. closed with Langer .... This means we get six brand new theatres fully equipped at a weekly rental one sixty each joes This has been a tough battle but we get six fully equipped theatres for no cash.” On January 19, 1927, Mr. Nathanson wired Mr, Thomas congratulating him on closing the deal with Langer, and saying in part: “This is a good job regardless of whether the theatres are profitable or not, as Langer situation was not a good one for us.” On February 1, 1927, Mr. Nathanson wired Mr. Thomas in part:
“Tf you think it advisable to buy pictures on 15 per cent basis for suburban circuit, do so. Use your own judgment. What we want to do is to cut Langer
film rental at least one-third.” On February 12, 1927, Mr. Thomas wired Mr. Nathanson in part:
“Tt was only the pressure that Milliman brought on him (Langer) about future that made him take any interest in our proposition at all.”
Mr. Milliman was General Manager of the Langer Circuit.
44
The correspondence indicates that Mr. Nathanson thought that the price paid for the lease of the Langer theatres was too high, but, notwithstanding this, finally closed the deal with Langer in Toronto on February 19, 1927, as indicated by his telegram to Thomas on that date. Mr. Bragg’s evidence, page 2007,
states: “Instead of bringing a profit of $25,000 per year (as prophesied by Thomas) the first year we operated that circuit we lost $5,163 and the second year, which was the first year of sound and the best theatre year, out of the six houses we made $2,600. The third year we lost $25,679.18, i.e. the year ending August 30, 1930, the total loss up to that time being $28,196.70.” The real object in making the deal appears to have been to get rid of the com- petition from Langer’s theatres. “ey Mr, Langer, at the negotiations for the lease of the said six theatres, ‘spoke about building a theatre to be called “the Orpheum,” and in this connection on January 7, 1927, Mr. Nathanson wired Mr. Thomas in part:
“Don’t worry, Thomas, we will take care of the Orpheum when we are ready. They had better be content to let things alone or they will find themselves in situation that will not be very pleasant.”
4. Vancouver—Fraser Theatre
This theatre is held by Fraser Theatre Company, Limited, a Company with head office in Vancouver and an issued capital stock of 100 shares of $1 each. It holds under lease the Fraser Theatre from one Young. It is a third run theatre in the City of Vancouver. Fifty per cent of the issued stock of the company is held by Famous Players.
An agreement dated January 15, 1927, between Abraham Young and B. C. Paramount Theatres Limited (called “the Company’) and Fraser Theatre Company Limited (called “the Fraser Company”), contains this recital:
“And whereas the Company owns and/or operates many theatres throughout British Columbia and would be able to obtain better pictures at lower rentals for said theatres than Young could do if operating independently.”
(Evidence, p. 3363.)
The agreement contemplates the formation of a company’ to be called “Fraser Theatre Company Limited” and Young and his nominees agreed to subscribe for 50 shares, and B.C. Paramount Theatres Limited for 50 shares, and that the Fraser Theatre shall be leased to the Fraser Company and shall be operated in its name from January 17, 1927, under the manage- ment and general supervision of B. C. Paramount. Young is to act as manager and B. C. Paramount is to do the booking for $25 a week. It further provides that Young shall have no authority and agrees not to make any pur- chase of plant or equipment exceeding $10 per week except at the written approval of the B. C. Paramount Company. By a further agreement dated February 25, 1927 (Evidence, p. 3367) “Famous Players” is substituted for ‘B. C. Paramount Theatres Limited ” as if Famous Players had been originally a party to the agreement. ‘The lease is dated January 15, 1927, (Evidence, Pp. 3367) and is for 5 years from January 17, 1927, with the right of renewal for a further term of 5 years. Famous Players acquired a 50 per cent interest in the profits, and controlled the operation of and booking for this theatre.
5. New Westminster—Columbia Theatre
On page 179 of the minute book of Famous Players, reference is made to an agreement dated January, 1927, between Columbia Investment Company of New Westminster and Famous Players, with reference to the erection of a theatre by the Columbia Investment Company in New Westminster, and the draft of a proposed lease to be taken by Famous Players upon completion of the said theatre was submitted to the directors, (Evidence, p. 194.)
45
In Exhibit 148 appears a telegram from Mr. Thomas to Mr. Nathanson, which shows that the New Westminster deal was closed on January 6, 1927. The Columbia Theatre, New Westminster, is one of those listed on page 12 of Exhibit 6 as one of the leasehold theatres presently operated by Famous Players. The theatre has a seating capacity of 912. New Westminster has a population of about 20,000 and there is one other theatre there with a seating capacity of 855, the provincial licence of which is issued to one F. L. Kerr.
6. Berry Chain of Theatres
This chain consists of: The Kitsilano Theatre, Vancouver. The Empress Theatre, Vernon. The Capitol Theatre (formerly the Empress), Kamloops. The Strand Theatre, Chilliwack. The Empress Theatre, Kelowna.
The agreement dated April 29, 1929, (Exhibit 87) between Rolland E. Berry of Vancouver, thereinafter called the “Proprietor” and Famous Players Canadian Corporation, thereinafter called the “Corporation” recites that the “Proprietor” owns the Kitsilano Theatre at Vancouver, the Empress Theatre at Kelowna, the Empress Theatre at Kamloops, the Strand Theatre at Chilliwack, the Empress Theatre at Vernon, and is lessee of the strand Theatre at Kam- loops and the Empress Theatre at Penticton.
The agreement provides that the “ Proprietor” agrees to assign to the “ Corporation” the lease of the Strand Theatres at Kamloops and the Empress Theatre at Penticton, and to assist the “ Corporation ” in getting renewals thereof and also to lease to the “ Corporation” the five theatres above referred to, and of which he is the owner, for a period of ten years from June 3, 1929, with the privilege of the renewal for a further period of ten years at the option of the “ Corporation ” on the said terms and conditions. The rental and consideration for the assignments of the two leases is $20,000 per annum. ~
The agreement contains provisions in regard to the insurance, repairs and replacements, and provides that the “ Proprietor” shall be retained as Super- visor at a salary of $5,000 per annum, and that he will be subject to and take directions from the “Corporation”? and further that he will not directly or indirectly, either as owner, shareholder, manager or employee or otherwise be engaged in the theatre business in the Dominion of Canada during the currency of the leases or the renewal. .
By a letter dated April 29, 1929, and attached to Exhibit 87, the Famous Players Canadian Corporation agrees with Mr. Berry to take over his lease of the old Imperial Theatre at Chilliwack, expiring not later than the end of the year 1931 at a rental of $155 per month, the building be rented as a store for $50 per month, which latter is payable to Famous Players Canadian Corporation. By this letter Famous Players also agree to take over all film contracts into which Berry had entered “ except those which are cancellable” which are to be cancelled.
By lease dated August 31, 1929 (Exhibit 88), the Kitsilano Theatre at Van- couver, the Empress Theatre, Vernon; the Empress Theatre, Kamloops, the Strand Theatre, Chilliwack, and the Empress Theatre, Kelowna, are leased for the ten-year term from September 23, 1929, with appropriate provisions in respect of the destruction by fire of any of the theatres, and insurance on the chattel property in connection therewith. The lessee, Famous Players Canadian Corporation, assumes the obligations of Berry in respect to the lease of the Imperial Theatre at Chilliwack referred to above.
46
By reference to Exhibit 6, page 12, it will be observed that these theatres are listed, as of August 30, 1930, as being leasehold theatres operated by Famous Players Canadian Corporation. The lease of the Empress Theatre at Penticton way by the agreement (Exhibit 87), to have been transferred to the Famous Players Canadian Corporation. This was not done. The Famous Players Canadian Corporation, however, acquired the freehold of this theatre, as appears on page 11 of Exhibit 6. It is now owned and operated by Famous Players Canadian Corporation separately.
Vernon is a town of about 4,000 population and the Empress is the only theatre there.
Kamloops is a town of about 5,500 population and in addition to the Capitol there is located there the Rex theatre owned and apparently operated by one W. A. Wilkinson.
Chilliwack is a town of about 2,500 population and the Strand theatre is the only theatre there.
Kelowna is a town of about 4,000 population and the Empress theatre is the only theatre there.
Penticton is a town of about 4,000 and the Empress is the only theatre in operation there.
7. Rossland—Capitoi Theatre
Famous Players Canadian Corporation leases and operates this theatre. It is the only sound theatre in Rossland which has about 2,000 population. (See Exhibit 347).
8. Vancouver—Orpheum Theatre
This theatre was built by Mr. Langer and was, as already stated, about to be erected when the negotiations were in progress for the lease of the theatres in the Langer Circuit. It was completed by Mr. Langer and leased to an independent exhibitor, the Orpheum Theatrical Company Ltd. This was one of the theatres which under the agreement, (Exhibit 29) dated May 29, 1929, between Famous Players Canadian Corporation and Radio-Keith-Orpheum Cor- poration, providing for the merger of the latter’s interest in Canada with Famous Players, was to be taken over by a new company, to be known as R-K-O Canada Ltd., and this was done as appears by Exhibit 6, page 18. Further reference will be made to this agreement.
Mr. Cohen states (Evidence, p. 2008) that this theatre never made a dollar from the day it was built and that it lost a great deal of money during the two years of its operation by the R.K.O. Corporation.
(C) Ontario 1. Kitchener—Capitol Theatre—Lyric Theatre
The Paramount Kitchener Theatres Limited was incorporated by Ontario charter dated June 12, 1920, with head office in Toronto. The capital was $200,000 7 per cent cumulative preference shares, with no voting rights until ‘in arrears in dividends for one year, and 14,000 common shares with a par value of $25. In June, 1920, a booking agreement was entered into with Paramount Theatres Limited, which was a 100 per cent subsidiary of Famous Players, and for which booking agreement Paramount Theatres Limited obtained 13,993 shares of the common stock of the company, being all of the common shares except the qualifying shares.
Coleman and Company agreed to assign their interest in certain lands avail- able as a theatre site, the vendors being the trustees of the estate of Louis Breithaupt, to whom the company agreed to pay $6,000 in cash and to give a
47
mortgage for $57,000. Paramount Kitchener Theatres Limited built the Capitol Theatre on this site in 1921. The preference shares were underwritten by Cole- man and Company and sold to the public in an amount presently issued of $157,900 and in connection with the sale thereof, the Paramount Theatres Limited contributed a portion of the common shares which they had acquired, to be given as a bonus on the sale of the preferred shares. Paramount Theatres Limited at present hold 54-88 per cent of the common shares, and Famous Players Canadian Corporation -42 per cent thereof and 6-27 per cent of the preferred. The directors of the Paramount Kitchener Theatres Limited are:
Arthur Cohen, President.
Clarence Robson, Vice-president.
N. G. Barrow, Secretary.
T. J. Bragg, Treasurer.
Harry Sedgwick, Asst. Secretary.
D. 58. Bowlby.
fac Young:
Paramount Theatres Limited carried on the operations of this theatre until January 1, 1928, from which date it was leased to Famous Players at an amount sufficient to pay an annual dividend of 5 per cent on the 7 per cent preferred stock of the company then outstanding. In this lease there is a further provision whereby Famous Players agreed to hand back the theatre at the expiration of the lease free of encumbrances, i.e., that Famous Players undertook to retire the principal of the outstanding mortgage, then amounting to some $15,000.
On January 21, 1928, an agreement was entered into between Famous Players, then lessees of the Capitol, and the Rex Theatres Limited, then the owner and operator of the Lyric Theatre in Kitchener, for the joint operation of the two theatres for nine years and eleven months expiring on December 31, 1937. The Rex Theatre Limited was an Allen Company, of which H. Allen was the president and S. Crafton was the vice-president.
This is a pooling agreement and it provides that the two theatres shall be managed and operated by Famous Players, and that the pictures therefor shall be contracted for by Famous Players and that dating thereof shall be by Herbert Allen subject to the direction of Famous Players. The admission price of each theatre is fixed, and the Lyric is to have a combination policy of pictures and vaudeville, while the Capitol is to show pictures only. The agreement gives the right to Famous Players to close the Capitol Theatre any time it sees fit to do so.
The agreement further provides that after payment of expenses and the creation of a reserve fund to be maintained at $1,000, any surplus shall be paid weekly in equal amounts to Famous Players and the Rex Theatres Limited. By reference to Exhibit 145 it will be observed that the price of admission in the Lyric was increased for adults, at the evening performance and Saturday matinees, from 35 cents to 45 cents, while the prices of the Capitol remained s ntially the same.
Baan these theatres are called first run and are the only theatres operated in Kitchener. The competition between them and otherwise in that city was by this agreement eliminated. The population of Kitchener is about 30,000, and the operation of the theatres has been exceedingly profitable.
2. Hamilton—Strand, Capitol, Pantages, Tivoli and Savoy Theatres
Strand-——This theatre was erected by a local syndicate in Hamilton, and Messrs. Morgan-Dean, Harris & Mulvaney, Limited, underwrote the shares and apparently were in control by virtue of their underwriting agreement. On Sep- tember 28, 1920, this company, called “ the Bankers ”, and Paramount Theatres
48
imi lled the “ Operators ”, entered into an agreement which recites that re pene are ifereeted in and control the Strand Theatre and have caused Strand Hamilton Theatres Limited to be incorporated, and have proposed that they will vest in the said company the said theatre, subject to a mortgage of $45,000 and will make special financial arrangements for the said company, in consideration of which the operators are to enter into an agreement to operate
the theatre for twenty years. The agreement provides for the conveyance of the theatre to Strand
Hamilton Theatre Limited, subject to the said mortgage, and for payment to the said theatre company of $10,000 in cash, for the consideration of $150,000 payable by the issue and allotment of 75,000 of preference shares and 75,000 of common shares, being all of the capital stock of Strand Hamilton Theatre, Limited. The company is to be managed by five directors, of which the Para- mount Theatres Limited shall have the right to elect three, and the bankers agree to transfer to the operators $37,600 in fully paid common shares on the execution of the agreement to operate the theatre.
The operating agreement is attached to the main agreement, which is Exhibit 106, and provides that the Paramount Theatres Limited shall have full control of the management of the theatre for 20 years. It is a term of the agreement that the Paramount Theatres Limited shall not be in any way morally or financially responsible for the success of the operation. Provision is made that the Paramount Theatres Limited may cancel the agreement if the theatre company fails to make payment for pictures or advertising matter, or other proper payments, for one month, and in the event of cancellation Paramount Theatres is to be entitled to retain the $37,600 of common shares as it own property. By this arrangement Paramount Theatres Limited, a 100 per cent subsidiary of Famous Players, obtain $37,600 of shares at par in this company and control of the theatre for twenty years without any capital investment. (Evidence, pp. 1260, et seq.)
No dividends have been paid on the common shares, but a substantial surplus has been built up by way of reserve for depreciation and payment off of the mortgage. Mr. Bragg says (Evidence, p. 1271) that the operation has been a moderate success.
The present directors of Strand Hamilton Theatre Limited are:
C. Robson, President and Managing Director. Dr. W. A. Bodkin, Vice-President.
T. J. Bragg, Treasurer.
George Stroud.
H. Sedgwick.
Mr. N. G. Barrow is Secretary.
Mr. Stroud is connected with Hamilton United Theatres Limited, with which Famous Players has a pooling arrangement.
Hamilton Pooling Agreement—Capitol, Pantages, Tivoli and Savoy Theatres.
Reference has been made on page 26 of this report to an agreement of February 7, 1930, by which Famous Players agree to manage and operate these four theatres for 10 years from March 1, 1930. It will be observed (Evidence, p. 764) that the lease of the Tivoli Theatre was held by Brighton Theatres Limited under a lease dated June 18, 1928, and that this had been in reality acquired for Famous Players and had been operated on behalf of Famous Players. The lease was taken by Brighton Theatres Limited because the persons interested did not care to deal with Famous Players, and Famous. Players acquired the stock of Brighton Theatre Limited, which has issued five shares, the only asset of which was this lease. Exhibit 140 is an agreement of March 1, 1929, between Famous Players and Brighton Theatre Limited. It is recited that Brighton Theatre Limited is operating the theatre in Hamilton, and
49
the agreement provides that Famous Players is to manage the theatre and Supervise its general conduct and supervision, in consideration of which the Brighton Theatre Limited has to pay Famous Players $49,950, which Famous Players agrees to accept in common stock of the company. These shares were allotted by Brighton Theatre Limited at a meeting on March 11, 1929 (Evi- dence, p. 1769). At this meeting Messrs. Crafton, Allen, Cohn, Bragg, Rob- son and Barrow were elected directors. The lease of the Hamilton theatre known as the Tivoli, dated June 18, 1928, was for ten years from July 2, 1928 at a rental of $11,000 for the first five years and $12,000 for the second five years. The operations of this theatre previously to the entering into of the pooling agreement (Exhibit 105) were not profitable. The combined operations of the four theatres after the pooling agreement, however, have shown a very large profit.
It appears that the Savoy Theatre has not been operated by the pool, except on one or two occasions when it was rented (Evidence, p. 1242). It was an old theatre and not wired for pictures. It also appears (Evidence, p. 1245) that the Capitol in 26 weeks under the pooling agreement made an operating profit twice as much as it had made the previous year. The Savoy had been operating at a loss and when it was closed this loss lessened. It also appears (Evidence, p. 1246) that the net profit of the three theatres, Pantages, Capitol and Savoy, in the year ending August 30, 1929, was roughly three-quarters of what it was in the first six months under the pooling agreement.
3. Peterborough—Capitol Theatre—Grand Theatre—Royal Theatre
Paramount Theatres Limited has a 66-7 per cent stock control of Para- mount Peterborough Theatres Limited, a company incorporated under the Ontario Companies Act on September 10, 1920, which company owns and operates the Capitol Theatre, Peterborough, a first run house with 1106 seats. Para- mount Theatres Limited is a 100 per cent subsidiary of Famous Players.
Theatrical Enterprises Limited is a 100 per cent subsidiary of Famous Players, the shares of which were acquired by them on March 13, 1925, from the Trustee of Trans-Canada Theatres Limited, an Allen incorporation. Theatri- cal Enterprises Limited holds the Grand Theatre, under lease dated November 20, 1925 (Exhibit 225) for a term which has been renewed from time to time, once by Exhibit 14. This theatre has been closed under an agreement dated November, 1925, between Paramount Peterborough Theatres Limited and Schneider-Rishor Limited, and subsequent renewals by which it was pro- vided that Paramount Peterborough Theatres Limited would not use the theatre for motion pictures or vaudeville, or stock companies, or travelling amusement companies at admissions of 25 cents for adults, or less. The theatre has been open for road shows, and occasionally rented, as appears also by Exhibit 225.
Theatrical Enterprises Limited also holds a lease of the Royal Theatre, Peterborough from R. L. Glover, dated November 20, 1925, the term of which has been extended and is at present subsisting (Exhibit 15). The theatre was actually acquired on December 1, 1925, and has remained closed since December 12, 1925. It is subject to the agreement of November, 1925, between Paramount Peterborough Theatres Limited and Schneider-Rishor Limited above mentioned, Both of these theatres are leased by Theatrical Enterprises Limited to Paramount Peterborough Theatres Limited, without profit to Theatrical Enterprises Limited, Reference to the evidence of Mr. Bragg as to the situation at Peterborough appears on page 171 of the evidence, where he says it was felt that all the theatres in that town should be operated for the benefit of Para- mount Theatres Ltd. i
Peterborough has another small theatre of 595 seats called the Regent, which is operated by Schneider-Rishor Limited, The population of Peterborough is about 22,000.
27557—4
50
The directors and officers of Paramount Peterborough Theatres Limited are: Arthur Cohen, President. Clarence Robson, Vice-President. Tt J) Brace, Treasurer, H. Sedgwick, Assistant Secretary. N. McLeod, Director. Mr. N. G. Barrow is the Secretary.
The directors of Theatrical Enterprises Ltd., are: Clarence Robson, President. N. G. Barrow, Secretary. ied: Brace... Treasurer.
4. Chatham—Chatham Theatre St. Catharines—Palace Theatre W oodstock—Capitol Theatre Trenton—Trent Theatre
These theatres are under lease to Theatrical Enterprises Ltd., which was a Dominion company incorporated on May 20, 1924, and as already stated is a 100 per cent subsidiary of Famous Players. The head office of this company is in Montreal. The interest of Famous Players in Theatrical Enterprises Ltd., was acquired as of March 20, 1925, on the transfer of 995 shares from the Quebec Savings and Trust Company. The lease of these theatres was renewed on March 28, 1929, for flve years.
Chatham Theatre, Chatham—This theatre was formerly called the Capitol, and has been operated since its acquisition by Theatrical Enterprises Ltd., part of the time, up to April 10, 1930, when it was closed on the opening of the new Capitol theatre, hereinafter referred to.
The Palace Theatre, St. Catharines—This theatre was acquired on March 11, 1925, and was first closed on May 29, 1926. It was open occasionally and for part of the week only, at various periods, until July 27, 1929, since when it has only been open two days in October, 1929, for the Dumbells; one day for Maurice Colbourne; and one day on which it was rented. The Dumbells and Maurice Colbourne present road shows.
The Capitol Theatre, owned by the Allens St. Catharines Theatre Ltd., and leased by Famous Players, is a first run house, as is also the King George which is run in opposition to the Capitol. The Capitol and the King George are the only theatres in St. Catharines in which sound equipment. is installed. St. Catharines has a population of about 25,000.
The Capitol Theatre, Woodstock.—This is a first run house with a seating capacity of 1212 seats. The only other theatre in Woodstock which is a city of about 11,000 population, is the Princess with a seating capacity of about 400 seats. The Capitol, Woodstock, is being operated.
The Trent Theatre, Trenton—The Trent Theatre was acquired by Famous Players under lease dated January 12, 1927, between the Trent Amusement Co., Ltd., and Theatrical Enterprises Ltd., for five years from January 1, 1927, with a provision for a renewal for a further term of five years at the option of Theatrical Enterprises Ltd. A Mr. McCarthy apparently had a half interest in the Trent and owned the Belle Theatre in Belleville, which latter theatre Famous Players later purchased, and some of the negotiations were apparently conducted through Mr, McCarthy, (See correspondence, Exhibit 146.)
ol
The New Capitol Theatre, Chatham.—This theatre was opened on April 11, 1930. It was built by one Mike Harris and his AEF hata es: cures by Famous Players before it was opened, at a time when it was only partially built (Evidence, p. 2887).
Paramount Theatres Ltd., had a lease of the Princess Theatre in Chat- ham, from George and Richard Zakoor, for five years from September 4, 1927, and was apparently operating that theatre, when on March 13, 1929, a Mr. J. W. Berman, special representative of Vitagraph Incorporated, wrote to Mr. Nathanson (Evidence, p. 2883, Exhibit 193) informing him that Mike Harris was promoting an organization of business men in Chatham to build a theatre near the Princess. Apparently this caused negotiations which resulted in the purchase of this theatre, which became the New Capitol, and upon the open- ing of which, on April 11, 1930, the Princess was closed and so remains (Evi- dence, p. 2885). It was actually constructed by the Harris Theatres Limited of Sarnia, Ontario.
Chatham has now only the New Capitol, equipped with sound, in opera- tion, and Famous Players through its subsidiary controls the situation in that city, which has a population of about 16,000.
5. Brantford—Capitol Theatre—Brant Theatre
The Paramount Brantford Theatres Limited jis an Ontario company incorporated by letters patent dated January 19, 1921, with head office at Toronto, and with an authorized capital of $225,000 preference shares at $106 par value and $350,000 common shares at $10 par value. In January, 1921, Famous Players seems to have had a substantial stock interest in this com- pany, and acquired in 1929 from the Canadian Bank of Commerce, to whom some of the shares were pledged, additional shares, so that now their stock interest is 70-87 per cent in the preference shares and 85-27 per cent in the common shares (Exhibit 235).
The Temple Theatre, now the Capitol, was acquired by Paramount Brant- ford Theatres Limited under an agreement of January, 1921 (Exhibit 142), between Brant Amusements Limited and Paramount Brantford Theatres Limited, and, incidental thereto, the Brant Amusements Limited transferred to the Paramount Brantford Theatres Limited a franchise or operating agree- ment from Famous Players Canadian Corporation Limited, a copy of which is attached to the Exhibit.
This latter agreement is between Famous Players and Paramount Brant- ford Theatres Limited, and recites that the Paramount Brantford intend to take over and acquire a theatre in Brantford and desire to make a contract with Famous Players for operating the said theatre. Famous Players agrees to select a manager and supervise the operation of the theatre and to book pictures and other entertainment, and arrange a supply of advertising material, for twenty years from February 1, 1925. The agreement contains the usual provisions to the effect that eas Be is not to be financially responsible and does not guarantee the financial results. ay
By a rabenes agreement of the said date (attached to Exhibit 142), between Brant Amusements Limited and Famous Players, it is recited that the parties by reason of their stock holdings will be financially interested in Paramount Brantford Theatres Limited, and that Brant Amusements Limited desire to sell to the public certain of their stock holdings and wish to make certain state- ments as to Famous Players Canadian Corporation Limited in connection with the sale of the said stock holdings. The agreement provides that Para- mount Brantford Theatres Limited in selling any stock owned by them may announce that Famous Players will under a franchise or operating agreement operate the theatre, and that the directors of the Paramount Brantford Theatres
27557—43
52
Limited shall be Messrs. J. P. Bickell, W. J. Sheppard, J. B. Tudhope, N. L. Nathanson, Roger A. Secord, Ernest Moule, and one other director to be approved by the two latter.
Under the same date there is an agreement between Brant Amusements Lim- ited and Famous Players (attached to Exhibit 142), which recites that Brant Amusements Limited are selling one of their theatres in Brantford and, as one of the terms of the sale, the Brant Amusements Limited have undertaken to furnish Paramount Brantford Theatres Limited, the purchaser, with a man- agement or franchise agreement in the usual form granted by Famous Players Canadian Corporation Limited, and that Famous Players agreed to enter into such contract upon payment to them of the sum of $231,350, payment of which is to be made by delivery of 23,135 shares in Paramount Brantford Theatres Limited, which will be fully paid up and non-assessable, and the agreement provides accordingly.
In the result, Famous Players acquired control of this theatre and $231,350 of par value common shares, a small portion of which shares were to be used for bonusing the sale of preference shares. Famous Players has since operated and controlled this theatre.
The Brant Theatre was apparently leased by one Ernest Moule, and from the early part of 1922 has been operated by Famous Players, the earnings being taken by the Paramount Brantford Theatres Limited. The theatre appears to have been actually owned by some people by the name of Lyons and was under lease to Moule. The arrangements up until 1928 appear to have been otherwise rather indefinite. By a lease of the 15th September, 1928 (Exhibit 141), Ernest Moule assigned to Paramount Brantford Theatres Limited a lease of May 28, 1927, from Arthur C. Lyons to himself for ten years from Feb- ruary 1, 1928, and also a lease of January 25, 1927, between Brant Apartments Limited and Brant Amusements Limited, which by the indenture of September 15, was assigned to Ernest Moule, these two being the leases held by Moule and comprising the property known as the Brant Theatre. The lease is for ten years from September 15, 1928, being for the term of the above recited leases less one day. This theatre has not been operated continuously. ; The Brant and the Temple (now the Capitol) are the only theatres operating in Brantford, and Famous Players, through its subsidiary, Paramount Brantford Theatres Limited, has since enjoyed a virtual monopoly of the theatre business in that city. The operations have been very profitable. Brantford has a popu- lation of about 30,000.
The present directors of Paramount Brantford Theatres Limited are:
A. Cohen, President
C. Robson, Vice-President
T. J. Bragg, Treasurer
H. Sedgwick, Assistant Treasurer Ei. Moule, Managing Director W. T. Henderson and
Roos orore
four of these being either officers or employees of Famous Players.
6. Guelph—Regent Theatre—Capitol Theatre
_ The Regent Theatre was acquired on February 5, 1920, by purchase from Famous Players Lasky Corporation of all the shares of Paramount Theatres Limited owned by Canadian Paramount Corporation (Exhibit 124, and Evidence, p. 1314). The present rental is $5,200, which is absorbed by the profits from the Capitol Theatre. The present lease of the Regent is from George W. Rein- hart and J. H. Collins, dated January 23, 1930, the term being five years from
July 29, 1930. It will thus be seen that the theatre though maintained closed has been re-rented.
53
The Capitol Theatre was acquired under lease from Elizabeth Keleher, dated March 2, 1923, for ten years from April 16, 1923, and is the first run theatre in Guelph, in fact, the only one now operated.
Guelph has a population of about 30,000, and Famous Players by its control of the Capitol Theatre and by maintaining the Regent closed has acquired a virtual monopoly of the theatre business in Guelph.
7. Port Arthur—Lyceum Theatre—Colonial Theatre
The Lycewm.—Paramount Theatres Limited had a lease from A. J. McCom- ber of this theatre, which was, on February 23, 1923, assigned by Paramount Theatres Limited to its 100 per cent subsidiary, Paramount Port Arthur Theatres Limited (Evidence, p. 1303). The lease expired on December 24, 1929, and was not renewed, and has not since been operated.
The Colonial was leased by Paramount Port Arthur Theatres Limited from Temple Godman and George W. Godman under lease dated October 1, 1924, for seven years and was renewed for a period of eight years from October 1, 1931 (Evidence, pp. 1319-1320). This is a first run theatre in Port Arthur and in fact the only theatre now operating there. The operation has been very profit- able. Port Arthur has a population of about 20,000. |
8. Fort William—Orpheum Theatre—Royal Theatre—Corona
Orpheum.—tThis theatre is leased by Paramount Theatres Ltd., from one J. C. Murray for seven years from August 1, 1927 (Evidence p. 1313).
Royal.—tThis theatre is leased from one John C. Graham by the same sub- sidiary of Famous Players for ten years from November 1, 1927, at a rental of $9,000 per year for the first five years and $10,000 per year for the next five years (Evidence p. 1313). It is maintained closed (Exhibit 6, p. 16).
Corona (Dance Hall).—These premises were purchased by Famous Players from Canada Permanent Mortgage Corporation in May, 1928 (Exhibit 224). It had originally been constructed as a motion picture theatre (Evidence p. 3308) but was being used as a dance hall at the time of acquisition. Famous Players lease it occasionally. There is no regular attendant on the premises (Evidence p. 3309). The conversion to a dance hall took place prior to Famous Players acquisition.
The Orpheum is a first run house, and in fact, the only moving picture theatre in operation in Fort William, which has a population of about 21,000. The operation even after absorbing the loss on closed houses has been exceedingly profitable.
9. Galt—Regent Theatre—Capitol Theatre
Regent—This theatre was one of the original chain acquired in 1920 by acquisition of stock of Paramount Theatres Ltd., and is presently held by lease to Paramount Theatres Ltd., from James Scott and B. F. Bennett for five years from April 27, 1928. It is maintained closed (Exhibit 6, p. 16).
Capitol—This theatre is owned by the Galt Theatre Co., Ltd., of which company Famous Players own 25 per cent of the preference shares and 35 per cent of the common shares. The first acquisition of stock by Famous Players was in November, 1929. The directors of the company include Clarence Robson as representative of the Famous Players Canadian Corporation. The theatre is leased to Famous Players. It is a first run house and in fact the only theatre operating in Galt, which has a population of over 13,000. oe
By leasing and operating the Capitol, and leasing and maintaining closed the Regent, this company Famous Players have a virtual monopoly of the theatre business in Galt. :
54 10. Famous Players Acquisition of Allen Theatres, 1928.
By an agreement dated June 6, 1923, Famous Players acquired control, or substantial interests, from G. T. Clarkson, the liquidator of Allen Theatres Limited, in the following companies and theatres:
Theatre Place Company
PiCUCH nes ee a TOT OnLO. nae Allen’s Beach Theatre Limited be CLOTS eet TOT CRGO =. 3 hak Allen’s St, Clair Theatre Limited Parbdgie) |f oe Toronloomeees Allen’s Parkdale Theatre Limited Wollgger we Ik TOFOnLOS. tes Allen’s College Theatre Limited WOU OL wes sen TOLORTO en jae Allen’s Danforth Theatre Limited DLOOTES. inde. LOLOL ee ‘Allen’s Toronto Theatre Limited I CQUEr ic pee TOVORT OM aha oe Beaver Theatre Company Limited Canon: so. le tae Kingston...... Allen’s Kingston Theatre Limited Gapilole eel St. Catharines..Allen’s St. Catharines Theatre Ltd. Baek chee ME eae Ey Covotrghs: G24 Allen’s Cobourg Theatre Limited CLOGS ta note UT GL) Old at ae . Stratford Theatre Company Limited COLON aa eee TIS es el ee »Paris Theatre Company Limited TECOET Ga a eae Oitawa uh Allen’s Theatres Limited, Ottawa Metropolitan..... Winnipeg......Allen’s Winnipeg Theatre Limited COD OLE Se areas LE Gavi LON ence Allen’s Edmonton Theatre Limited TUG oe eae HE ONEKCGE se cute Allen’s Montreal Theatre Limited AOR packs anuld mene CGLOOnY. ak
(now Palace).. Allen’s Theatre Company, Limited (Calgary) CONOl.2. Paks aan Moose Jaw.... Allen’s Theatre Company, Limited (Calgary) Cpuol Ackoel athe BONGO apa Allen’s Theatres Limited, Brandon Metropolitan..... Regina........Allen’s Theatres Limited, Regina
The ofter of Famous Players is contained in a letter to Mr. Clarkson, dated June 6, 1923 (Exhibit 213). This has already been dealt with in part when referring to the British Columbia situation. By reference to Exhibit 123, which is a list of companies in which substantial holdings were acquired from the trustees of Allen Theatres Limited under the above agreement of June 6, 1928, it appears that Famous Players acquired share control of all these except Allen’s St. Catherines Theatre Limited, Allen Danforth Theatre Limited and Toronto Theatre Limited. As to the Capitol, St. Catharines, Famous Players has leased this and has control of the theatre operations. In regard to the Danforth Pheatre, this company was bankrupt and they went out of business, and the
shares were valueless (Iuvidence, p. 1587). In reference to the Toronto Theatre Limited, this was a holding company which owned all the shares of the Bloor Theatre Limited, Toronto, operating the Bloor Theatre (Evidence, p. 1859).
The situation in regard to these theatres may be summarized as it is in Mr. Brage’s evidence (p, 1536)
“We acquired control of certain of those companies, but we actually acquired the management control of all of them after meeting the shareholders of the TESPOCLIVE, COMIPANIES 5.0...) academe ae When the shareholders of these various companies met they elected boards of directors. the majority of whom were nominees of Famous Players Canadian Corporation Limited.”
I have examined the minute books and other corporate records of most of these companies and find that corporate action was taken which bears out Mr. Brage’s statement.
The Toronto situation will be dealt with hereafter specially,
55 11. Kingston—Capitol Theatre--Grand Theatre—Tivoli Theatre
_ Capitol—This was an Allen acquisition in 1923 as above mentioned, and is presently leased to Famous Players by Allen’s Kingston Theatre Limited.
Grand.—This was purchased (Evidence, p. 3331) on April 3, 1925, it being one of the remaining assets of Trans-Canada Theatres, Limited, which had gone into bankruptcy. The theatre has been operated for road shows until com- paratively recently, but the Government has now condemned it and it has not been in operation. ;
Tivoli (formerly Strand).—This was one of the theatres originally acquired by Famous Players in 1920, and on December 8, 1926 (Evidence, pp. 3332-3) it appears that there was a verbal arrangement for the pooling of the Strand and the Capitol Theatres. The lease of the Strand Theatre expired and was not renewed, but subsequently the property was purchased by Famous Players, the old Strand Building remodelled, and it is now being operated as the Tivoli Theatre.
Famous Players thus has acquired control of the two leading theatres in Kingston, the Capitol with a seating capacity of 1,207, and the Tivoli with 512 seats. The only other theatre is the King Edward, a small theatre of 258 seats. The population of Kingston is about 21,000.
12. London—Capitol Theatre—Grand Theatre—Palace Theatre
Capitol—Control of Allen’s London Theatre Ltd., was acquired by Famous Players in 1924-25, by purchase of shares from time to time. Famous Players presently own 31-39 per cent of the preferred and 75-93 per cent of the common shares. This company owns the Capitol theatre subject to a lease of the land, and lease same to Famous Players. This is a first run theatre.
Grand—This theatre was purchased by Famous Players’ nominee, in March, 1925; it was closed on March 18 upon acquisition. It operated only for road shows and stock companies until 1930, when sound equipment was installed. The theatre has been operated continuously since 1930 by Famous Players.
Palace-—Famous Players acquired the lease of this theatre and ownership of the equipment and furnishings by agreement dated June 17, 1930, from the Independent Amusement Co., Ltd., and one Sam Marks (Exhibit 126). It 1s leased to and operated by Palace Theatre, London, Ltd., a wholly owned sub- sidiary of Famous Players. It is a second run house.
The Capitol has a seating capacity of 1,296; the Grand 1,231; the Palace, a second run house, has a seating capacity of 874. The chief opposition 1s Loew’s Theatre with a seating capacity of 1,965 seats, a first run house, the Patricia, with 1,073 seats, and the Rex with 496 seats. London has a popula-
tion of about 70,000.
13. Ottawa—Regent Theatre—Imperial Theatre—Keith’s Theatre
Regent.—An Allen acquisition in 1923 under agreement (Exhibit 213). Imperial—Held under lease by Famous Players, being acquired in April,
Both the above are first run houses.
Keith’s—This theatre was acquired as part of the R.K.O. chain in 1929 (Exhibit 29). This will be dealt with separately. .
There are nine opposition theatres in Ottawa, which has a population of about 125,000.
56
14. Cobourg—Capitol Theatre
This is another Allen acquisition in June, 1923 (Exhibit 213). Allen’s Cobourg Theatre Ltd., a 100 per cent subsidiary of Famous Players, holds the theatre under lease from Florence Sutherland. The Capitol is the only theatre in Cobourg, a town of over 5,000 population.
15. Parts—Capitol Theatre
A further Allen acquisition in 1923, presently leased from Famous Players and operated by the Paris Theatre Company Ltd., a wholly owned subsidiary of Famous Players. It is the only theatre in Paris, a town of over 4,000 population.
16. Welland—Capitol Theatre—Grand Theatre
Capitol—T his theatre is held under lease from one W. M. German by assignment from one Lambert. The lease is dated August 28, 1924 (Evidence, p. 1316). It was renewed September 1, 1929, for five years in the name of Paramount Theatres Ltd., a Famous Players’ 100 per cent subsidiary.
Grand.—Famous Players acquired the lease of this theatre on April 17, 1930, for a term of two years, with an option for a further two years and an option to purchase. The lease provides that the premises need not be kept open or in operation as a moving picture theatre, and the lessee may close the same throughout the term. The lessor covenants that while Famous Players is In occupation she will not
of any moving picture theatre, or place used, or capable of being used as a place of public entertainment, without the prior consent of the lessee” “it being the express intention of the parties that ... . the lessor will not either directly or indi- rectly be engaged in the theatre or public eur business in competition with
The lease also provides that the-lessor may sell the equipment subject to giving Famous Players the first refusal. The theatre has been maintained closed since its acquisition (Exhibit 220),
The Capitol is the only theatre now operating in Welland, and by main- taining the Grand closed, Famous Players have, through its subsidiary, acquired a virtual monopoly of the theatre business in Welland. The population of Welland is about 10,000. The operation has been profitable even after the rent of the Grand has been absorbed.
17. Owen Sound—Classic Theatre—Opera House—Savoy Theatre
Classic.—Lease of this theatre was acquired by Paramount Theatres Ltd., for five years from October 30, 1922 (Exhibit 157). It was subsequently extended for a further term of five years (Evidence, p. 2146).
Opera House.—First acquired by Paramount Theatres Ltd., by lease in November, 1922, expiring November 20, 1924, when it was given up. Subse- quently the Opera House was again leased by Famous Players for seven years from September 16, 1929 (Evidence, p. 2515).
_Savoy.—One Georgas held this theatre under lease dated March 15,1923, expiring March 31, 1928, and then renewed for a further term of five years from April 1, 1928, and still held. Paramount Theatres Ltd., entered into an operating agreement with Georgas dated July 2, 1924 (Exhibit 225), and renewed March 21, 1927 (Exhibit 82), whereby Paramount Theatres Ltd., manage and operate and book for the Classic and Savoy and “shall have the executive management and control of the said theatres and shall decide all
57
questions of policy relating to the operation thereof and each of them.” Georgas acts as local manager of these theatres at a salary equal to the booking fee to be paid to Paramount Theatres Ltd. The agreement further provides that
“unless the parties hereto otherwise agree the Savoy shall not during the currency
of this term be operated as a motion picture house, but may at the discretion of the
company and the local manager be operated for Road Show attractions, or leased
for local entertainments.”
The term of the agreement continues to October 30, 1932, with the option to Paramount Theatres Ltd., to extend it for a further five years. By the agree- ment Paramount Theatres Ltd., has a 50 per cent interest in the profits or losses, as the case may be, of the joint operation.
The Opera House was open for 24 days, while leased during 1923-24, and has been closed continuously since date of second acquisition (Exhibit 225). The Savoy was operated about 48 days during 1927-28 season; for the first 7 days during the 1928-29 season, and for 16 days during the 1929-30 season, for legitimate attractions, some few picture road shows and for rentals (Exhibit 139). The operation of the theatres has been profitable.
By acquiring control of the Classic and leasing and maintaining closed the Savoy and Opera House, as above detailed, Famous Players has main- tained a virtual monopoly of the moving picture business in Owen Sound, which has a population of over 12,000. There are no other theatres there.
18. Sarnia—Crescent Theatre—Imperial Theatre
These theatres are owned and operated by United Theatres Limited (p. 22, supra). Control of the Company and the operation of the theatres was acquired by Famous Players on or about January 11, 1928 (Exhibit 225), by acquisition of stock. Famous Players presently own 50-23 per cent of the stock of United Theatres Limited.
The Crescent was closed on June 30, 1928, reopened on September 17 oi that year and operated until June 29, 1929, and again reopened on September 23, 1929, to operate to May 31, 1930, since when it has been closed.
Imperial is the only theatre operating in Sarnia, which has a population of about 17,000.
19. Cornwall—Palace Theatre—Capitol Theatre
In the late Fall of 1926 Famous Players decided to “ start building a theatre in Cornwall, or trying to form a pooling arrangement with the Palace Amuse- ment Co.” (Evidence, p. 3141.) The Palace Amusement Company then oper- ated the only theatre in Cornwall. Thereupon Mr. Clarence Robson of Famous Players visited Cornwall and obtained an option on a site (Evidence p.13142). Thereafter an operating agreement dated March 18, 1927 (Exhibit 127-A), was executed between Famous Players and Palace Amusement Company Litd., the latter owning and operating the Palace.
The agreement provided that the Palace Company build a new theatre. Famous Players agreed to select pictures and entertainments therefor and also for the Palace Theatre. The theatre was duly constructed and is now known as the Capitol. Of the earnings a fixed annual sum is paid to the Palace Amuse- ment Co., by way of overhead carrying charges. The Palace is operated jointly with the Capitol. The profits or losses of the joint operation are divided equally between Famous Players and the Palace Amusement Company Ltd. The joint operation came into effect on January 2, 1928. The Palace has been closed since January 22, 1928, with the exception of one or two weeks (Exhibit 225).
The Capitol is the only theatre in operation (Exhibit 350) in Cornwall. The population of Cornwall is about 14,000. — By the procedure above mentioned, Famous Players acquired a half interest in, and virtual control of, the theatre business in Cornwall, and the operation has been very profitable.
58 | 20. Stratford—Classic Theatre—Majestic Theatre
Classic-—Control of this theatre was acquired at the same time as other Allen theatre interests in June, 1923. The last current lease thereof expired in September, 1929, and was allowed to lapse.
Majestic—Stratford Theatre Co. Ltd., a 100 per cent subsidiary of Famous Players, participates in 50 per cent of the profits of this theatre, which is leased and operated by the Peterboro Theatres Ltd., an Allen incorporation. Peterboro Theatres Ltd., and Stratford Theatre Co., Ltd., which controlled the Classic have a pooling arrangement which has been in effect since January, 1928, and they control the property of the former Princess Theatre in Stratford, now closed (Exhibit 117-A).
The Majestic is the only theatre operating in Stratford, which has a popula- tion of over 18,000.
21. Windsor—Capitol Theatre—Imperial Theatre-—Palace Theatre Walkerville—Tivoli Theatre
Famous Players acquired control of these theatres as a result of an agree- ment dated June 16, 1926, between J. O. Reaume, Simon Meretsky and J. Glassco, as vendors; and Famous Players as purchasers (Exhibit 102, also Exhibit 225). The interests of the theatres are vested in Paramount Windsor Theatres Ltd., a company which Famous Players control, having 56 per cent of the stock. The directors and officers thereof are as follows:
A. Cohen, President
T. J. Bragg, Vice-President N. G. Barrow, Secretary Clarence Robson, Treasurer S. Meretsky, Director
The company own and operate the Capitol at Windsor, and the Tivoli at Walkerville, and lease and operate the Palace at Windsor. The Empire was acquired on September 6, 1927, and was maintained closed until it was sur- rendered on August 31, 1930, when, the theatre being obsolete, the lessees were successful in cancelling the lease (Exhibit 225). The other three theatres are operated as first run houses. .
The Tivoli is the only theatre in Walkerville, a town of about 7,000. The fegent of which one B. Mechanic is the licensee, having a seating capacity of 495, is the only other theatre in Windsor. The combined population of Windsor and Walkerville is about 70,000.
The operation has been exceedingly profitable from its inception:
22. Belleville—Belle Theatre—Regent Theatre
| These theatres were acquired by Famous Players in September 1929, from J. C. McCarthy. The Belle was owned by him, and the Regent he held under lease. He had been operating the theatres for some time prior to acquisition by Famous Players. Mr. Robson in his evidence (pp. 279 and 281) states that he had_ been In negotiation with McCarthy to purchase the Belle, or form some ie of ibaa Sra Reonin with him or buy a half interest in the Belle, for a year or possibly two years prior to July, 1929. An option qui y Famous Players, dated July 26, 1929 (Exhibit (Q),, ter a mines tee and the acquisition of the lease of the Regent. The option was taken up on August 13, 1929, and the two theatres acquired in September, 1929 3 The Belle has been operated since acquisition. The Regent was closed upon acquisition, but shortly after opened until May 31, 1930, when it was again closed, and so remained up to the date of taking evidence, The Belle has A,
59
seating capacity of 961, the Regent of 502. There is one other theatre in Belle- ville, the Capitol, having 860 seats. The licensee is Robert W. Weller, who also operates Weller’s Opera House at Trenton. The Capitol is equipped with Pacent sound equipment. Belleville has a population of about 13,000.
23. Brockville—New Brockville Theatre—Capitol Theatre
Control of these theatres was acquired by Paramount Theatres Limited, Famous Players’ wholly owned subsidiary, under an operating agreement for four years from September 5, 1929 (Evidence, p. 1318), whereby the two theatres are jointly operated. There were, however, prior operating agreements, the first of which commenced September 1, 1923 (Exhibit 225). The New Brockville was first closed on that date. It has been opened occasionally since then for legitimate and some few moving picture road shows, and for other rentals.
Paramount Theatres Limited have a 75 per cent interest in the results of the joint operation (Exhibit 235, p. 8). The New Brockville has shown an oper- ating loss over the past three years, but the operation of the Capitol, even after absorbing the loss of the New Brockville, has been very profitable.
They are the only theatres in Brockville and Famous Players has a virtual monopoly of the theatrical business in this city, which has a population of about 10,000.
24. Sault Ste. Marie—Algoma Theatre
The site was purchased by Famous Players in 1929, the theatre constructed and opened thereafter. It has 1,042 seats and is a first run house. There are two other theatres there, the Orpheum seating 590, the licensee being Stevens Orpheum Limited, and the Princess seating 332, the licensee being L. & W. Amusement Company. The population is about 22,000.
25. Sudbury-—Capitol Theatre
Negotiations for the acquisition of a site in Sudbury commenced as early as May 30, 1929 (Evidence, p. 1009). The convevance of a portion of the site which was ultimately acquired is dated July 11, 1929 (Evidence, p. 1010). Thereafter the theatre was erected by Famous Players and was opened in 1930, The. Capitol has 1,419 seats. ;
There are two other theatres equipped with sound in Sudbury, viz: the Grand Opera House with 869 seats, the licensee being Grand Theatre of Sudbury, Limited, and the Regent with 544 seats, the licensee being Stevens Theatres Limited. Sudbury has a population of about 20,000.
26. Port Hope—Regent Theatre—Capitol Theatre
The Regent—This theatre was acquired by Famous Players a number of years ago. It was closed a year prior to the erection of the Capitol (Evidence, p. 657) and presently has been condemned as a theatre (Evidence, p. 654).
The Capitol—The site was acquired by Famous Players, the theatre erected and opened about June 8, 1930 (Evidence, p. 657). The Capitol is now the only theatre in Port Hope, which has a population of about 4,500.
27—North Bay—Capitol Theatre
reement entered into in 1928 (Exhibit 83) Louis Rosenbaum aes ote Players that he would build a theatre on lands described in North Bav and according to plans to be approved by Famous Players. The agreement further provides that upon completion Famous Players would operate and manage the theatre for $50 a week, and, after deducting 5 per cent on the cost of the land and building and 7 per cent on the cost of furnishings and an operating expense as therein defined, the profits were to be equally divided after
60
providing a reserve. Famous Players agrees that the percentages of the value of the land and building and furnishings and equipment shall be paid as a rental to Rosenbaum, and guarantees due payment thereof, also taxes and insurance premiums. Rosenbaum, owing to financial difficulties, was unable to complete the theatre and on May 11, 1929, an agreement (Exhibit 84) was entered into, reciting the purchase of the theatre by Famous Players and a release of Rosen- baum from his covenants and agreements in the earlier agreement of April, 1928 (Exhibit 83).
By an agreement of April 13, 1929 (Exhibit 85), Famous Players having advanced substantial sums of money to Rosenbaum to be applied on cost of the construction of the theatre, agrees to purchase the property and all plant, fur- nishings and equipment. The purchase price to Rosenbaum was cost, plus $20,000. The total investment appears to be in the neighbourhood of $400,000. There is an operating profit in this theatre, but the operation as a whole has not been successful, having regard to the amounts written off for depreciation of the building, the equipment and, more particularly, the sound equipment.
There is another theatre in North Bay, called the Royal, owned and operated by the North Bay Theatre Company Limited. Both of these are first run theatres and apparently compete. The Capitol has 1,435 seats, and the Royal 762. North Bay has a population of about 16,000.
28. Famous Players Acquisition of Allen Theatres, 1928
1 Cobalt—Classic
2 Hatleybury—Broadway
3 Leamington—Capitol
4 Preston—Park
5 Toronto—Royce
6 Weston—Weston
7 Wallaceburg—Capitol (formerly Patricia) 8 Mt. Dennis—Mt. Dennis
9 New Toronto—Capitol
10 Port Colborne—King George 11 Smiths Falls—Capitol
12 Toronto—New Hollywood 13 Toronto—Major, St. Clair 14 Toronto—Major, Rogers Rd.
The theatres numbered 1 to 7, inclusive, as previously pointed out in this report, were by the agreements (Exhibits 117-A, 117-B and 117-C) to be taken over by Theatre Holding Corporation Limited upon its incorporation, in which company Famous Players has a 50 per cent interest, and to be operated by Premier Operating Corporation Limited.
Mt. Dennis——Reference is made to this theatre in Exhibit 117-A, where it is provided that if acquired or controlled by the Theatre Holding Corporation Limited, it shall be operated under an agreement similar to that with Abby Cohn for the operation of the Weston Theatre. An interest in this theatre was acquired by Theatre Holding Corporation Limited quite recently and is now operated under provisions of Exhibit 117-A. Mt. Dennis has a population of about 7,500 and this is the only theatre in operation there. It is a suburb of Toronto. 4 _ Capitol, New Toronto.—This theatre is comparatively recently built. This EPH RIED the only theatre in New Toronto, which has a population of about
King George, Port Colborne——This theatre is apparently owned (Exhibi 235) by the Savoy Theatres Ltd., and Theatre Bde Ghee Sal He i 50 per cent stock interest. It has a seating capacity of 602 and is the only theatre in Port Colborne, a town of about 6,000 population.
61
Capitol, Smiths Falls—This theatre is operated by the Gem Theatres Litd., a 100 per cent subsidiary of Theatre Holding Corporation Ltd. (Evidence, p. 1506). The actual operation, however, is in Premier Operating Corporation Ltd.
The Princess Theatre in Smiths Falls, the lease of which was acquired by Premier Theatres Ltd., as previously mentioned, and being for a term of ten years from November 13, 1922, is closed (Exhibits 117-A and 117-B). It will be recalled that this was one of the O’Brien Eastern Ontario Circuit, the lease of which has not been renewed. There was another theatre in Smiths Falls called the Rideau, which is apparently not now in operation. The Capitol is the only theatre actually operating and it has a seating capacity of 790 seats. Smiths Falls has a population of about 7,000. It is said that this theatre competes with the Perth Theatre in Perth, Ontario, nine miles distant, but this situation will be dealt with later under the heading of Protection. (See p. 143, post.)
Major, Roger’s Road, Toronto—tThis theatre was acquired by a 50 per cent stock ownership, in the latter part of 1930. It has a seating capacity of 658 and is situated in the northwest outskirts of Toronto.
New Hollywood Theatre, Toronto—The Premier Operating Corporation caused a company to be incorporated called the Federal Theatre Ltd., which had built for it, by the Bennett Organization, in Toronto, the Hollywood. By the rights exercisable in Exhibit 117-B, Theatre Holdings Corporation, Ltd., took over the shares of Federal Theatre Ltd., and the theatre is now being operated by Premier Operating Corporation. The theatre was opened in the fall of 1930 and has a seating capacity of 1029; it is a first run house in the zone.
When this theatre was built the Queen’s Royal, a small theatre nearly opposite to it on Yonge Street, was closed, but it has since re-opened and is now, as formerly, independently operated. The Queen’s Royal has a seating capacity
of 538.
Major, St. Clair Avenue, Toronto.—The acquisition of this theatre was contemporaneous with that of the Major, Rogers Road, Theatre. It is 6n St. Clair Avenue. Theatre Holding Corporation have apparently a 50 per cent interest (Exhibit 235). It has a seating capacity of 620.
299. Famous Players Toronto Theatres
1) Alhambra (21) Gerrard 5 Palace (22) La Plaza (3) Oakwood (23) Mavety f (4) Capitol (North Toronto) (24) Prince of Wales (5) Beach (25) Eastwood (6) College (26) Parliament (iast..C Lair es ake
2, otodrome (8) Parkdale oe ee
(
a ae 30) Crystal (given up) (11) Regent (31) Wonderland (given up) (12) Hippodrome (32) Greenwood (13) Uptown (33) Classic , (14) Shea’s Victoria (34) Runnymede (15) Beaver (35) Belsize (16) Teck (36) Bedford (17) York Be ae 0 he) Ais (39) Major, Rogers Road (20) Danforth (40) Major, St. Clan
62
Alhambra Theatre, Toronto.—This was one of the original chain of theatres acquired by Famous Players on February 5, 1920, by acquisition of stock of Paramount Theatres Limited. The current lease is from one J. W. McNabb to Paramount Theatres Limited for ten years from November 17, 1929. It 1s -a second run house in its zone, with a seating capacity of 1,126. It is situated on Bloor Street. The Bloor Theatre of Famous Players and the Madison, an independent house, are in close proximity to the Alhambra.
Palace Theatre—tThe site of this theatre was acquired by Famous Players from N. L. Nathanson on February 26, 1920; thereafter the theatre was erected. The Palace has a seating capacity of 1,599 seats. It is a first run suburban house. It is situated on Danforth Avenue, in the east end of the city.
Oakwood Theatre, Toronto—This theatre was originally built by two brothers, Jethro and James Crang, who organized a company called the Oak- wood Amusement Company. By an agreement (Exhibit 111) dated June 22, 1920, it is recited that Famous Players has the right under an agreement with Famous Players-Lasky Corporation to exhibit the productions thereof in the Dominion of Canada, The agreement provides that upon certain notice from Famous Players, Jethro Crang should take steps to incorporate a company under the name of the Oakwood Amusement Co., Ltd., with a capital of $250,000, and would cause the present Oakwood Amusement Co., Ltd., to transfer its assets to the new company, in consideration of the issue by the new com- pany to the present company or its nominees of its whole capital stock. It further provides that upon incorporation Famous Players would enter into an agreement with the new company for the term of twenty years, by which Famous Players will operate and manage the theatre of the Oakwood Amusement Co., known as the Oakwood Theatre, arrange for a supply of motion pictures films and artists
“so that the new company will always be supplied with pictures and entertain- menis, of a character and standerd equal to the pictures and entertainments
exhibited from time to time in other theatres operated or controlled by Famous Players, such as the Regent and Strand theatres.”
It was further provided that the productions of Famous Players-Lasky Corpo- ration would be shown at 20 per cent of the gross receipts of the theatre, and that other pictures would be purchased at the ‘best terms possible, without any profit to Famous Players. The principal agreement (Exhibit 111) further provides that forthwith, on the entering into of this agreement, Crang will cause to be transferred to Famous Players or its nominees half of the issued stock oi the new company, and steps will be taken to elect upon the board of directors three nominees of Famous Players, and further provision is made for equality of control. On completion of the organization of the new company and performance of all the conditicns, Famous Players is to pay to Crang $25,000 and to deliver two promissory notes of $12,500 each at three and six months,
The agreements were apparently carried out, and later, having acquired additional stock from the estate of one of the Crangs who was deceased, the company was incorporated. The present directors and officers of the company are as follows:
T. J. Bragg, President
Clarence Robson, Vice-President N. G. Barrow, Secretary
W. E. Kerr, Treasurer
A. Cohen, Director
H. Sedgwick, Director
Exhibit 111 is referred to in evidence, pages 1578 et seq.
(; j
63
In reference to the acquisition of the interest in the Oakwood by Famous
a Mr. Bragg (Evidence, p. 1383) states in answer to my question as “Q. It seems to me that there might be some advantage to Famous Players
Canadian Corporation, Lid., by reason of the increased volume which they got and
ae aE eS influence with the exchanges by reason of their larger purchasing
ne: That might possibly be the case, sir, but [ do not think that was the con- sideration at that time. I think the Crangs were more anxious to secure a proper muy not pictures, as the Allen Theatre had been erected quite close to them on
sj oe rae ue yon suggesting that without this agreement they might not have
_ “A, They would have secured pictures, but they probably secured better
pictures as a result of this agreement.”
It is to be noted that on October 27, 1922, at the annual meeting of the new company, the directors elected were apparently the two Crangs, Messrs. Nathanson, Bickell, Cohen, and Mr. Morlock’s name was apparently written in, in pencil, As Mr. Morlock was a member of the solicitors for Famous Players, this would give them four of the six directors. The following year on November 29 the board of directors elected were as follows: the two Crangs, Messrs. Nathanson, Bickell and Bragg. Mr. Bragg was elected secretary- treasurer, and Mr. Barrow assistant secretary (Evidence, p. 1387).
On February 25, 1929, it appears that Mr. Crang Jr. had died, and Mr. Rob- son was appointed a director and managing director to fill his place. Mr. Jethro Crang tendered his resignation as director and president, and Mr. Sedgwick was elected a director in his place and Mr. Bragg was appointed president. Mr. Mor- lock tendered his resignation and Mr. Barrow was appointed a director. Thus we have a board composed entirely of officers and employees of Famous Players, This apparently followed the purchase of the Jethro and James Crang Jr. shares. This purchase brought Famous Players’ holdings to 75°02 per cent of the issued capital stock.
It would appear from Exhibit 350, p. 3, that Famous Players has a 100 per cent interest in this theatre, but in any event they have control. The seating capacity of this theatre is 1,418 and it is situated near the corner of St. Clair and Oakwood avenues, in the northwest part of Toronto. It is a third-run house and first-run in the zone. This theatre, since Famous Players acquired the interest therein has always shown a large operating profit. Its principal com- petitors are Allen’s St. Clair on St. Clair avenue, west of Oakwood, and the Christie east of Oakwood on St. Clair avenue, both of which are under control of Famous Players or a subsidiary.
Capitol Theatre, North Toronto—By a document dated December 8, 1922 (Exhibit 109), expressed to be a lease, Ronald McClelland sublet to Para- mount Theatres Limited and himself the premises known as the Capitol Theatre on North Yonge street, Toronto, for ten years from December 1, 1922, at an annual rental of $8,000 for the first nee Siow for the next four years, and
12,000 for the remaining five years oi the term. ated ae An agreement ae be made on December 1, 1922 (Exhibit 110), but which must have been made subsequently to Exhibit 109, in which McClelland and Paramount Theatres are parties of the first part and therein called “ the Lessees,” and Paramount Theatres Limited is the party of the second part and is called “the Operating Company,’ recites that the Lessees have a lease of the Capitol Theatre. The agreement provides that the Paramount Theatres Lim- ited shall operate the theatre, book and supply films and other enteral as thev think best during the term of the above mentioned lease, for w ue h they are to receive $50 per week. McClelland is to manage the theatre at $75
per week “subject to the instructions of the op theatre and the course of management
wish to intervene or lay down regulati
erating company as to the policy of the as and when the operating company may ons in regard thereto.”
64
It is further provided that McClelland may terminate the engagement on one month’s notice and that all profits made by the theatre, over and above the amount necessary to pay the operating expenses referred to in the agreement, shall be divided between McClelland and the Paramount Theatres Limited equally, and that pictures of Famous Players Lasky Corporation of New York (now Paramount Publix) shall not cost more than twenty per cent of the receipts.
The theatre has a seating capacity of 1,165, has been operated continu- ously under this agreement and has proved quite profitable. It is a first-run theatre in the zone, its nearest opposition is the Bedford, some distance north, a small theatre operated by Famous Players jointly with one Walter G. Hunt.
Beach, St. Clair, Parkdale, College, Danforth, Bloor and Beaver Theatres, Toronto—All of these theatres, as appears on p. 54, supra, were acquired from G. T. Clarkson, the liquidator of Allen Theatres Limited, and in view of Mr. Bragg’s statement quoted on p. 54, supra, the details of the percentage of control appear to be immaterial.
The Beach is in the southeast part of the city on Queen street at Waverley, and is quite close to the Family Theatre at the corner of Queen and Lee streets, and not far from the Prince Edward near the corner of Queen street and Beach avenue. It has 1,537 seats, is a first-run in the zone, and is leased to Famous Players.
The St. Clair is in the northwest part of the city on St. Clair avenue near Dufferin street. It is quite close and in the same zone as the Oakwood, and has a seating capacity of 1,556. It is a first-run house in the zone.
Parkdale—This theatre is in the southeast part of the city on Queen street near Roncesvalles avenue, quite close to the theatre called the Odeon, a small independent theatre of 449 seats. It is also first-run in the zone and has a seating capacity of 1,548 seats. The operations of this theatre have been exceedingly profitable. For some unexplained reason this theatre is leased by Allen Parkdale Theatre Limited to Paramount Theatres Limited, for a term of ten years from May 1, 1926. Paramount Theatres Limited is a 100 per cent subsidiary of Famous Players, whereas Famous Players own 17-60 per cent of the preferred shares and 59-78 per cent of the common shares of Allen’s Parkdale Theatre Limited. ;
College-—This theatre is situated on College street, near Bathurst street, very close to a small independent theatre operated by Jacob Cohn, called the Garden, with a seating capacity of 567. The seating capacity of the College 1s 1,518. It is leased to and operated by Famous Players.
Bloor —This theatre is situated on Bloor street west, just east of Bathurst, and almost opposite an independently owned theatre, the M adison, and almost diagonally across from the Alhambra, owned by Paramount Theatres Limited. It has a seating capacity of 782 and is a second run house in Toronto, being a first run theatre in the zone.
It is operated under the name of the Bloor Theatre Limited, being a 100 per cent subsidiary of Famous Players. It will be recalled that the shares of the Toronto Theatre Limited, the then owner of the theatre, were purchased from Mr. Clarkson, the trustee of Allen’s Theatres Limited. When the existing mortgage was foreclosed, in order to get title to the property Famous Players had to purchase from the mortgagee, the Consolidated Trust Corporation. This was done through Holland G. Darby, an employee of Famous Players, and a company called the Bloor Theatre Limited was then incorporated as of May 15, 1924, and according to the conveyance from Darby to this company, the con- sideration for the purchase was the assumption of a mortgage for $28,000; $500 for the original incorporators’ stock and $39,500 by the issue of 395 shares of
65
the new company’s stock. Darby contracted that this stock be given to Fa Players. The mortgage of $28,000 assumed was apparently miter heh back as part of the purchase money by Darby. The capital of Bloor Theatre Limited is $40,000 in 400 shares of $100 each. The actual cash paid in addition to the $28,000 mortgage was $10,000 (Evidence, p. 1857).
_ Beaver.—This theatre is situated on Dundas street west, in th District. Four hundred fully paid shares, being the whole of the ane pie stock of the Beaver Theatres Limited, were acquired from Mr. Clarkson under the agreement dated June 6, 1923 (Exhibit 213), by Famous Players, who operated the theatre until December 8, 1926, when it was turned over to B.& F Theatres Ltd. under the agreement between Famous Players and Irving Samuel Bloom and Samuel Fine of that date. It has since been operated by the latter company under the terms of that agreement (Exhibit 91). Further reference will be made to this theatre when dealing with the operations of B. & F. Theatres Limited.
Tivol.—the Tivoli Theatre of Toronto Limited was incorporated on March 20, 1924, with a capital of $40,000 divided into 400 shares of $100 each. Just previous to the incorporation of the company, Mr. Sedgewick, acting for Famous Players, had acquired the leases of this theatre, it being on two separately owned parcels of land. The shares were issued to Mr. Sedgwick for the leases and they were in turn transferred by Mr. Sedgwick to various other officers of Famous Players.
The theatre was originally owned by Temple Theatre Corporation Limited, and by the agreement with Mr. Clarkson of June 6, 1923 (Exhibit 213), 35 preference shares out of an issue of 1,100 and 23 common shares of $100 each in the capital stock of that company were acquired by Famous Players. The affairs of this company got into difficulties and it was in arrears in payments under the leases (Evidence, p. 3259) which had become forfeited, and Famous Players made an arrangement with the owners of the land to clear up the leases, and the Tivoli Company was formed to take them over.
Famous Players has now a 100 per cent interest in this company and theatre and has operated the theatre continuously, and the operations have been very profitable. The Tivolz is the leading downtown first run theatre of Famous Players showing exclusively moving pictures, its principal rival being Loew’s theatre. It has a seating capacity of 1,553.
Shea’s Hippodrome Theatre, Regent Theatre, Shea’s Victoria Theatre, and Loew’s Uptown Theatre, Toronto—By an agreement (Exhibit 116) dated October 21, 1922, Shea’s Amusement Company Limited and Famous Players Canadian Corporation Limited agreed upon the joint operation of the Hippo- drome and Regent theatres, under which Famous Players was to operate the Regent and from November 20, 1922, assume the management and operation of Shea’s Hippodrome and arrange for the productions in both theatres. Famous Players was also to book for Shea’s Hippodrome photoplay productions and/or other entertainment.
The basis of this agreement seems to be the franchise which Famous Players had, giving them the right to exhibit in Canada feature pictures pro- duced by Famous Players Lasky Corporation. This franchise agreement has been referred to heretofore, but it might be convenient here to note some of its provisions. It is dated January, 1920, and recites that the New York Corpora- tion, Famous Players Lasky Corporation (now Paramount Publix) is a producer of motion pictures and that Famous Players, called the ‘ New Company operates a series of theatres in Canada. The agreement provides that the New York Corporation gives and grants to Famous Players for a period of ene: years the right, privilege and franchise to exhibit the productions made by the New York Corporation and its subsidiaries in the theatres operated by the new
27557—5
66
company in the Dominion of Canada, in each place where the new company or its subsidiaries operates a theatre, before such picture is shown in any other theatre in the said place; such right or privilege being generally known and referred to in the trade as a “ first run”. There is to be paid for the right to exhibit pictures 20 per cent of the gross receipts of each theatre for each day on which the Famous Lasky picture is exhibited. Provision is also made that a sale may be made by the New York Corporation to another customer, in case the Famous Players do not accept any picture.
The pooling agreement (Exhibit 16) further provides that after payment of operating expenses and fixed amounts for rentals of the two theatres, the remain- ing profit shall be divided equally between the parties. Famous Players is to charge $50 weekly for each theatre for its services. The contract also provides that Famous Players during the currency of the contract will not acquire or assume control of, or be interested directly or indirectly in, any downtown theatre which is not then in existence at the date of the contract, without first obtaining the written consent of the Shea Company.
This agreement remained in force until March 22, 1926, on which date a further agreement was entered into (Exhibit 17) between Shea Amusement Company Limited (called “the Shea Company ”) ; Marcus Loew’s Theatres Limited (called “ Loew’s Theatre Company”) and Famous Players Canadian Corporation Limited (called “ Famous Players ”) The agreement recites that the Shea Company is lessee of Shea’s Hippodrome, which is owned by Shea’s Hippodrome Company Limited, and Famous Players owns and operates the _ Regent Theatre on Adelaide Street, Toronto; Shea Company is the lessee of Shea’s Victoria Theatre, and that Loew’s Theatre Company own and control Loew’s Uptown Theatre, and also that the parties agree to the joint operation and management from and after August 30, 1926, of all said theatres, and that. the Shea Company and Famous Players agree that from and after August 30, 1926, the agreement (Exhibit 16) shall be at an end.
The agreement provides that Famous Players shall continue to operate the Regent and Shea’s Hippodrome until August 30, and from that date shall assume management and operation of Shea’s Victoria Theatre and Loew’s Uptown Theatre, and shall arrange for the production in all four theatres of suitable entertainment, whether by means of artists, motion picture films or otherwise. Famous Players agrees also to book for all said theatres such artists, photoplay production and/or other entertainment and, subject to the approval of Marcus Loew Booking Agency as to the Uptown, may lease any of the theatres for theatrical purposes.
Famous Players in its discretion may close from time to time and keep closed any one or more of the theatres when in their judgment it is advisable to do so, “the intention being to give them, the said Famous Players, the widest possible discretion in the management of the said theatres.” It is how- ever, agreed that Loew’s Uptown shall not operate under the policy of vaude- ville. Each party is to pay the carrying charges of its theatre or theatres respectively.
The gross profits are to be pooled and applied and distributed: firstly, in payment of operating expenses including the booking fee of $50 per week for each house to Famous Players; secondly, pro rata in payment of a weekly rental of each theatre as fixed in the agreement; and thirdly, to divide the remaining profits as follows: To the Shea Amusement Company, proprietors of the Victoria Street Theatre and the Hippodrome, 374 per cent; to Marcus Loew’s Theatre Limited for the Uptown, 25 per cent; and to Famous Players, as proprictors of the Regent and also as the operating company, 374 per cent. It is further agreed that no division is to take place until a reserve fund of 825,000 is created and maintained.
ve iver ee"
67
The rental of the Uptown is guaranteed by the other two parties to the agreement. Famous Players may, if it so desires, appoint a manager, or man- agers who shall be in actual charge of the theatres, or any one or more of them. It is also provided that notwithstanding that any theatre may be closed, rental therefor shall be payable and the pooled profits distributed in the same man- ner as if the theatre were open, and that neither party shall during the term of the contract acquire, assume control of, or be interested either directly or indirectly in any downtown theatre in Toronto not in existence at the time of the agreement without the written consent of the other parties.
Shea’s Hippodrome is primarily a vaudeville theatre and it has been operated under a policy of showing moving pictures in connection therewith. It is a first run downtown house and has been operated under this policy continuously. Since entering into this agreement, Famous Players has acquired a 59 per cent interest in the capital stock of Shea’s Amusement Company, which interest was acquired in 1928. It might be interesting to note that the directors of Shea’s Amusement Company Limited elected on January 16, 1923, on the organization of that company, were Messrs. N. L. Nathanson, J. Shea and J. P. Bickell, who were shareholders in their own right and apparently not representing Famous Players (Evidence, p. 3398). Mr. Nathanson and Mr. Bickell sold their ne to Famous Players in 1928. Shea's Hippodrome has a seating capacity of 2,663.
Regent —This theatre was acquired originally under the agreement of Febru- uary 5, 1920, between Famous Players Lasky Corporation and Famous Players Canadian Corporation Ltd. by obtaining all the stock of Regent Theatres Limited, the owner of the theatre. Jt had been operated as a motion picture house for some years and was operated at the time of entering into of the agreement (Exhibit 17). Subsequently a legitimate stock company, the Cameron Matthews Players, occupied it, and thereafter it was open occasionally. The record of its operation is contained in Exhibit 225, and from this it will appear that from October 10, 1925, to May 29, 1926, it was continuously showing motion pictures. From that date on it has only been open for pictures a short time and during the subsequent period has been rented from time to time principally to a stock company. It has, however, not been open for any purpose of public entertain- ment since May 12, 1928. The Regent has a seating capacity of 1,475.
Shea’s Victoria—This was originally an exclusive vaudeville house. This theatre was under lease from the owners, Shea’s Theatre Company Limited, to Shea’s Amusement Company Limited for ten years from August 30, 1926. It was operated from September, 1926, by the Vaughan Glaser Stock Company, to the fall of 1927, when it was taken over by the Cook Stock Company, who operated it until early in 1928 and was further occupied by another stock com- pany until June 22, 1929. It was then closed until an engagement of the Dum- bells for the weeks of February 8 and 15, 1930, since which it has not been used for theatrical purposes. It is now being operated as an indoor golf course under lease to L. S. Shapiro from November 1, 1930 (Exhibit 235). The seating capacity is 1,995.
Loew’s Uptown.—This theatre is situated on Yonge Street near Bloor Street, and has a seating capacity of 2,975, being one of the largest moving picture theatres in Toronto, and was regarded until quite recently at least as a downtown first run house. Up till the fall of 1930 it en] oyed a very large patronage, being operated under a policy of stage attractions combined with motion pictures and having a large orchestra. The entertainment was under the supervision of Jack Arthur until the fall of 1930, when Mr, Arthur’s entertainment and the orchestra were moved to the Imperial Theatre, control of which had been acquired by Famous Players. For a time the Uptown became a second run house, but 1s
Q7557—-E2
68
ow again a first run (Evidence, p. 3161). This change in policy has had a very ated effect on oe este of the Uptown, as is indicated by Exhibit 230, a comparative statement of the receipts of Uptown and Tivoli in Toronto for corresponding periods in 1929 and 1930, the receipts of the Uptown being less than a third of what they were under the former policy, whereas the receipts of the Tivoli have been less but not to any such extent as those of the Uptown. Notwithstanding the closing of the Regent and Shea’s Victoria, and the change in policy of the Uptown, the cperations of this joint enterprise have been financially successful.
30. B. & F. Theatres Limited, Toronto
(1) La Plaza. (10) Danforth.
(2) Christie. (11) Hastwood.
(3) Mavety. (12) Prince of Wales.
(4) Gerrard. (13) Parliament.
(Oy, 1 eck. (14) Crown.
(6) Beaver. (15) Photodrome.
(7) York. (16) Victorna.
(8) Classic. (17): Crystat
(9) Danforth East, (18) Wonderland. (Afterwards called Grover). (19) Greenwood.
All in Toronto. The first four above mentioned were contributed by B. & F. under the agreement dated December 18, 1926 (Exhibit 91), between Famous Players and Bloom and Fine, under which B. & F. Theatres Ltd. was incorporated and took over the management and control of the theatres therein named. The theatres numbered 5 to 9 inclusive were similarly contributed by Famous Players, and B. & F. Theatres Ltd. commenced operations about the end of 1926 with these nine theatres.
(10) Danforth——This theatre (Evidence, p. 1130) was not included in the original agreement (Exhibit 91) but was under lease to Messrs. Bloom and Fine and one Sam Sternberg, and turned into B. & F. Theatres Ltd, almost simultaneously with the entering into of the agreement (Exhibit 91). This
theatre must be distinguished from that referred to in the agreement as the .
Danforth East, which afterwards became the Grover (Evidence p. 1131).
The agreement refers to the Danforth Theatre as then being erected, lease of which is to be assigned to, or otherwise vested in the new company. The Dan- forth is a first run in the zone and has a seating capacity of 1,360.
(11) Eastwood (12) Prince of Wales—These theatres are controlled by B. & F, Theatres Ltd., under agreement dated March 24, 1928 (Exhibit 99) between B. & F. Theatres Ltd., the Eastwood Theatre Ltd., Danforth and Woodbine Theatre Ltd., and Famous Players. This is in reality a pooling agreement. It recites that B. & F. Theatres Ltd., is lessee of the Grover, Gerrard and the Classic theatres, and the Eastwood Theatre Ltd., the owner of the Hastwood, and the Danforth and Woodbine Theatre Ltd., the owner of the Prince of Wales, and that the arrangement to be entered into so far as the Classic is concerned is to be limited to the term of the present lease of that theatre, and the agreement is subject to the provision that none of the parties will on the expiry of the lease of the Classic, if the pool is then still in force, take any lease or renewal thereof, except for the benefit of the pool. The agree- ment provides that the theatres mentioned shall be operated under a pooling agreement in which their receipts and expenses shall be pooled, and the profits divided. The pool is not to be affected or dissolved if the Classic is no longer included at the expiry of the lease
69
B. & F. Theatres Ltd. is to manage and operate the theatres and Famous Players is to do the booking after consultation with Mr. W. A. Summerville. Apart from the bookings and control of the policy, B. & F. Theatres Ltd. is to be responsible for the management of the theatres. In case of a difference of opinion in regard to the policy and management, a committee is to be appointed to decide any question.
The total receipts are to be deposited in a bank account to be opened by B. & F. Theatres Ltd., in trust, under the name of the Danforth-Gerrard Amusement Co., which was simply a banking name, and the rentals and operating expenses are to be paid out of this account. Cheques drawn on the above mentioned bank account are to be signed by a representative approved by Famous Players, and a representative approved by the Eastwood Theatre Ltd., and Danforth-Woodbine Theatre Ltd. After $2,000 is accumulated and maintained in the bank account, $250 per week is to be paid to the Eastwood Theatre Ltd., and $300 per week to the Danforth-Woodbine Co., and $516 per week to B. & F. Theatres Ltd., in connection with the respective theatres of each, and each company is to pay its own overhead. After operating expenses and the above overhead allowances are paid, any sum in the bank account in excess of $2,000 shall be divided 50 per cent to B. & F. Theatres Ltd., 25 per cent to the Eastwood Co., and 25 per cent to Danforth-Woodbine Theatre Ltd.
The committee referred to above is named and consists of Mr. N. L. Nathanson, Famous Players, Mr. W. A. Summerville, representing Danforth- Woodbine Theatre Ltd., Mr. B. E. Knight, representing Eastwood Theatre Ltd., and Mr. 8. Bloom, representing B. & F. Theatres Ltd., with power to substitute, and in case of deadlock, Lawrence Solman, if alive, shall be called in; failing Solman, Jules Bernstein of Loew’s Theatre, Toronto, is to give the casting vote.
The pool is to take over existing picture contracts, but all future contracts are to be made only with the consent and approval of Famous Players, who, after consultation with Summerville, decide as to what policy is the best for the combined theatres, and their decision shall be final and acted upon subject as aforesaid.
Provision is made also for the closing of any theatre, if such is deemed to be in the interest of the pool.
Tt is also provided that the management of the combined theatres may rent such other theatres as may be in the zones or vicinities of the theatres covered by the agreement, and may operate such other theatres or keep them closed. It is indicated in this connection that there is at present in mind the Greenwood and the theatre which has recently been built in opposition to the Grover on Danforth.
Famous Players guarantee the due performance by B. & F. Theatres Ltd., of their responsibilities and covenants under this agreement.
The Eastwood and Prince of Wales theatres are both being operated under this agreement. The Eastwood has a seating capacity of 905 and the Prince of Wales a seating capacity of 975; both are fourth run theatres in Toronto.
At this point it might be well to refer to the evidence of Mr. William Selby James, commencing on page 4584. Mr. James on page 4597 states that, aa the lessee and operator of the Greenwood theatre, he was approached by ® man named Knight, in the employee of Mr. Summerville, who had been in control of the Eastwood and the Prince of Wales theatres, and who is mentioned in the agreement (Exhibit 99), and who signs that agreement on behalf of the Eastwood Theatre Ltd., and the Danforth-Woodbine Theatre Ltd., together with Mr. Knight, who appears to have been Vice-President oi the Eastwood Company, and Secretary Treasurer of the Danforth-Woodbine Theatre Co., and that Mr. Summerville also came to him and suggested that he meet Messrs. Bloom and
70